It is well known that the United States is British Columbia’s largest export market and number one international commercial partner.
Even if the specific details of export magnitudes are not widely known, most people recognize that being physically adjacent to the world’s largest economy means B.C.’s trade will invariably be tilted to the south. A common language, similar business and legal environments, and previous trade agreements further augment this powerful cross-border trade orientation.
In a typical year, B.C. sends about half of its merchandise exports stateside. In 2021, the share was even higher: 55 per cent. China, a distant second, accounts for 15 to 16 per cent of the province’s international merchandise exports, followed by Japan at around 10 per cent.
Less well known is that the distribution of B.C.’s exports within the U.S. is similarly shaped by geography and the size of the various state economies. In particular, the three West Coast states – Washington, Oregon, and California – collectively absorb 45 to 46 per cent of the province’s U.S.-bound merchandise exports. We estimate that, if services are included, these three states buy more than half of everything the province sells to the giant American market.
When it comes to cross-border trade, geography and size matter – a lot. The I-5 highway, connecting coastal cities from San Diego through California to Portland, Seattle and Vancouver, with arteries extending into northern B.C., has long supported economic activity along the west coast of North America. It has also enabled steady trade growth. The built-up networks of railways, pipelines, electricity transmission lines and seaports and airports – and the sharing of a common time zone – all serve to reinforce the pattern and depth of commerce along the west coast.
Underscoring the point that geography matters, last year B.C. exported $9 billion in goods to next-door Washington state, equal to 30 per cent of U.S.-bound merchandise exports. In fact, exports to Washington state match the value of B.C.’s exports to China, the world’s second largest economy.
The size of the individual state economies is also a key factor shaping cross-border trade. California is the largest economy in the U.S., and one of the biggest in the world. So, it’s not surprising that California ranks as B.C.’s second largest individual state export market, taking nearly 12 per cent of our U.S.-bound goods.
Broadening the picture to include services, California stands out even more, given that it boasts world-class advanced technology and film and entertainment industries. California is also important as a source of international visitors to B.C. When service exports are included, our research suggests that California accounts for about one-fifth of the value of British Columbia’s U.S.- bound exports.
California is unique among the province’s trading partners in that service exports exceed merchandise exports in dollar terms. B.C.’s exports of film and television productions have increased sharply and are now close to $2.5 billion annually; the bulk of this involves business done with California. Also, California accounts for a disproportionate share of B.C.’s exports of scientific, technical and professional services and of technology-based services, and the state is also a leading supplier of international tourists to the province. In total, once tourism activity fully resumes, we project that B.C.’s service exports to California will soon exceed $6 billion, almost twice the value of our merchandise exports to the Golden State.
In sum, international goods exports to B.C.’s three neighbouring coastal states amounted to almost $14 billion in 2021. With some educated guesswork, and assuming tourism fully recovers, service exports to these three states should soon reach $12 billion annually. Thus, the combined value of goods and services sold to California, Oregon and Washington amounts to almost $26 billion, equal to 55 per cent of B.C.’s total goods and services exports to the United States.
An updated and more complete look at the direction of provincial exports and the role of the three coastal states in B.C.’s global trade underscores the significance of the “Cascadia” region in shaping the province’s economy. When services are counted, this dynamic U.S. region purchases an eye-popping 30 to 33 per cent of B.C.’s international exports. And these are not stagnant markets; all three states have diverse, growing economies. This means there is scope to further deepen B.C.’s already substantial commercial ties with our West Coast neighbours.
Jock Finlayson is the Business Council of British Columbia’s senior adviser; Ken Peacock is the council’s senior vice-president and chief economist.