OTTAWA — The federal government should modernize how it tracks international commerce to avoid overestimating U.S. trade and provide the timelier insights businesses need during times of disruption, says a report released Thursday.
“Traditional statistics miss digital flows, overcount integrated production, and lag reality by weeks and months. This overstates Canada’s trade with the United States, and undervalues digital trade,” says the paper published by the CSA Public Policy Centre, a think tank run by the Canadian Standards Association (CSA Group).
“Modernizing trade data can help Canada focus resources on growing opportunities,” the report continues. “Real-time intelligence can also improve Canada’s response to supply chain shocks, help combat a thicker, more challenging U.S. border, and maintain Canada’s attractiveness as a location for co-production.”
Danielle Goldfarb, the trade expert who authored the report, “Canadian Trade Realities and Strategies After the U.S. Trade Shock,” said there are several ways headline-making statistics miss the real story. In the highly integrated North American auto sector, for example, parts and other intermediate goods are counted for their full value every time they cross the Canada-U.S. border, instead of their added value. That inflates those figures.
Meanwhile, digital services exports — Canada’s fastest-growing area of trade — are likely under-reported, she said. One reason: it can be hard to track Canadian sales made through foreign affiliates, including financial, insurance and professional services. This trade stream can be an important hedge against tariffs the U.S. and China have slapped on certain Canadian goods, but billing through U.S.-based platforms obscures the full picture.
So does the traditional focus on merchandise-based trade, given services account for about three-quarters of Canada’s GDP. Statistics Canada tracks international trade in services through surveys, so that data can be incomplete. To Goldfarb, though, the bigger issue is that people are not used to thinking about trade in that way. “There’s a lot of activity that’s taking place that’s given less attention,” she said. “Trade is not just about physical stuff crossing the border. It’s increasingly about services. It’s about investment. It’s about flows of ideas.”
Canada’s trade data also lags by weeks or months. “That’s kind of like ancient history in this moment,” said Goldfarb. The delay makes it harder to monitor the impact on business decisions when U.S. President Donald Trump slaps another tariff on Canada, or strikes a deal with another country.
The report suggests the federal government look to the private sector for ideas on using artificial intelligence and blockchain technology to monitor trade flows and supply chains with greater speed and accuracy. “Logistics firms have current data on shipment locations and delays,” it says. “AI can classify goods from unstructured customs forms. Satellite and sensor data can monitor congestion and chokepoints.”
Goldfarb encouraged everyone to put their heads together to solve the problem. “You have to really collaborate with ports, logistics companies and so on to modernize the intelligence and information we have for our trading systems,” she said.
