Content page
From [Institution name]
Market Diversification and Supply Chain Support
Last Revised: February 1, 2024
ISSUE: ACOA’s Measures to Support Market Diversification and Supply Chain Development
RESPONSE
Market Diversification
- The historic momentum that the Atlantic economy is experiencing presents the region with a unique opportunity to seize new markets, participate in global supply chains, and attract investments.
- Exports from Atlantic Canada comprise over 30% of the region’s GDP with the value of exports increasing from approximately $28.3B in 2015 to just over $43.5B in 2022.
- But to remain competitive, we know that the region must diversify its markets, take advantage of Free Trade Agreements beyond the US, and build on its competitive advantages in technology-intensive industries of the future, including clean energy, aerospace and defence, bioscience, ocean tech, and ICT.
Supply Chains
- While transportation is not directly part of ACOA’s mandate, the Agency closely follows activity in this area because of the importance of a resilient transportation system to our businesses and communities.
- ACOA and Transport Canada work closely together on some initiatives. For example, in 2022, ACOA helped Transport Canada organize the Atlantic Canada regional consultation session for the final report of the National Supply Chain Task Force.
- Additionally, to support the development of green supply chains, ACOA is currently collaborating with Transport Canada on the Green Shipping Corridors Program, announced in Budget 2023, by increasing outreach and facilitating regional tours.
- As well, to increase export and supply chain opportunities in the aerospace and defence industry, ACOA promotes investments through Canada’s Industrial and Technological Benefits (ITB) Policy and raises awareness of business opportunities that exist.
BACKGROUND
The historic momentum that the Atlantic economy is experiencing presents the region with a unique opportunity to seize new markets, participate in global supply chains, and attract investment.
Exports from Atlantic Canada comprise over 30% of the region’s GDP with the value of exports increasing from approximately $28.3B in 2015 to just over $43.5B in 2022. Traditional sectors like food and seafood exports are some of the largest contributors to the economy, with the fisheries industry alone accounting for $6.2 billion or 14.3% of regional exports in 2022.
However, the high prevalence of resource sectors (agri-foods, fishing and seafood, mining, oil and gas, refined petroleum, forestry), the small size of its internal markets, and the region’s continued reliance on its largest trading partner, the US, make Atlantic Canada vulnerable to trade shocks including geopolitical tensions, labour shortages, and inflation.
To remain competitive, the region must diversify its markets, take advantage of Free Trade Agreements beyond the US, and build on its competitive advantages in technology-intensive industries of the future, including clean energy, aerospace and defence, bioscience, ocean tech, and ICT.
ACOA continues to support many activities targeting export markets throughout Europe and the Indo-Pacific region, including:
- Short-term sector-based trade missions and other international events.
- Longer-term program support to companies to assist them in developing and executing strategic market entry plans.
From 2016 to 2022, the share of the region’s exports to the European Union increased from 10% to 13% as firms leveraged the Canada-European Union Comprehensive Economic and Trade Agreement.
The Indo-Pacific is now the world’s leading region of economic growth and offers Atlantic firms significant opportunities for trade and expansion. Through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), there is an opportunity to develop stronger trade ties between Canada and the other 10 CPTPP member countries (Australia, Brunei Darussalam, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).
ACOA collaborates with Global Affairs Canada and the four Atlantic provinces to support export and investment growth in the region through the Atlantic Trade and Investment Growth Strategy (ATIGS).
ACOA provides financing for trade and investment projects through the Atlantic Trade and Investment Growth Agreement (ATIGA), a federal-provincial cost-shared agreement, as well as through its core programs: the Regional Economic Growth Through Innovation (REGI) program and the Business Development Program (BDP).
Since April 2015, ACOA has approved approximately $1.16B for trade-related clients. Of that amount, $1.023B went towards 1,405 commercial clients (3,903 projects) who identified as exporters or companies with export potential. During that period, ACOA also approved $135.8M towards 145 non-commercial clients with 410 trade-related projects.
ACOA is also active in policy development and works to ensure that Atlantic firms are considered in national policies and programs. Examples include the Trade Commissioner Service, the North American Platform Partnership, and the Industrial and Technical Benefits (ITB) policy.
Supply chains
While transportation is not directly part of ACOA’s mandate, the Agency closely follows activity in this area because of the importance of a resilient transportation system to our businesses and communities.
ACOA and Transport Canada work closely together on some initiatives. For example, in 2022, ACOA helped Transport Canada organize the Atlantic Canada regional consultation session for the final report of the National Supply Chain Task Force.
The Response Actions provided by the Task Force of particular interest to Atlantic Canada are:
- Immediate Response Action #5. Complete twinning of Highway 185, which connects Quebec to New Brunswick. The completion of Highway 185 in Quebec has been underway since 2015 and is expected to be completed in 2025. It has been estimated that the untwined section of the highway is costing the Atlantic Canadian economy $770M – $1.3B in unrealized GDP annually and is a significant cost to the movement of cargo, in particular long combination vehicles.
- Immediate Response Action #8. Waive 50% of airport rent payments. While all the airports in Atlantic Canada under the National Airports System would be pleased with this reduction in rent paid to Transport Canada, it would be particularly important for Halifax. Halifax pays the highest rent in the region which is expected to be $6 million in 2022.
- Immediate Response Action #12. Develop a long-term transportation supply chain strategy, including initiating a review to update and modernize related regulations. This strategy, long called for by industry, would be a benefit to Atlantic Canada. It could bring attention to this region and highlight opportunities for the large transportation assets, such as the Ports of Halifax and Saint John, which are underutilized compared to the congestion seen at larger ports in Vancouver and Montreal. The Task Force has indicated their desire to see a more balanced national approach in the supply chain with a focus on three areas: the East Coast, West Coast and St. Lawrence River.
Additionally, to support the development of green supply chains, ACOA is currently collaborating with Transport Canada on the Green Shipping Corridors Program, announced in Budget 2023, by increasing outreach and facilitating regional tours.
To increase export and supply chain opportunities in the aerospace and defence industry, ACOA promotes investments through Canada’s Industrial and Technological Benefits (ITB) Policy and raises awareness of business opportunities that exist.
In 2022-23, the Agency invested $2.8 million, through the Aerospace Regional Recovery Initiative, for 9 projects to help Atlantic Canada’s aerospace sector green its operations and adopt environmentally sustainable practices, improve productivity and strengthen commercialization while furthering integration into regional and global supply chains.
Finally, in 2022-23, ACOA invested $7.3 million from its Prince Edward Island Potato Stabilization and Innovation Initiative on 23 projects to ensure the sustainability of Prince Edward Island’s potato sector and related supply-chain sectors affected by trade disruptions and for longer term strategic investments.
PREPARATION AND APPROVALS
Prepared by: Darlene Boone, IBD Officer, ACOA HO, 902-217-3858
Sector contact: Faith McIntyre, Director General, Programs, 902-940-1417
Sector approval: Daryell Nowlan, Vice-President, Policy, Programs and Communications, 506-851-3805