North American Free Trade (NAFTA) renegotiations aren’t inspiring confidence among Canadian businesses, which are considering seeking new opportunities outside our borders.
Roughly 1,000 companies were surveyed as part of the most recent Export Development Canada biannual trade confidence index. Of those companies, 23% said they have been negatively affected by the NAFTA renegotiations,
According to the survey, 26% are paying more attention to the European market, with 18% developing new products, services and processes for Europe, and 15% expanding their export volumes to that continent.
While the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA), has Canadian businesses thinking about Europe, trade confidence has dropped after an unexpected surge in the spring.
In fall 2017, the trade confidence index dropped by 0.4 percentage points to 73.5%. This drop came after an increase of 1.6 percentage points in the spring of 2017, rising to 73.9% from 72.3% in fall 2016.
Of the survey respondents, 26% indicated they were considering moving part of their operations to the United States depending on the direction of the NAFTA negotiations.
The potential loss of Canadian businesses to the south is not the only potentially alarming response to concerns over the NAFTA talks; 14% of companies surveyed reported that they would delay investment in Canada and 7% indicated they would reduce their investment in Canada in response to the NAFTA negotiations. Employment didn’t fare much better, with 13% of business survey respondents saying they would delay hiring and 7% saying they would reduce the number they would hire.
Large businesses appear to be the most concerned about the NAFTA negotiations, with their trade confidence index falling 2.4 points, to 71.6% from 74% in the spring. The country’s small businesses also had their trade confidence shaken somewhat, with their index falling 0.2 points.
Medium-sized businesses remain optimistic when it comes to trade, with their confidence index rising by 0.8 points.
British Columbia had the smallest decline in investor confidence of any region in Canada, with B.C.’s trade confidence index falling 0.2 points. Ontario and Quebec had their trade confidence fall 0.3 and 0.5 points respectively. The largest drop in confidence was in Atlantic Canada where the trade confidence index fell 2.7 points.
