Commercial and Economic Relations

Commercial and Economic relations between Canada and the United Kingdom - historically strong and mutually advantageous - reached an all-time high over the past couple of years. The UK is by far Canada's most important commercial partner in Europe and, from a global perspective, ranks second only to the United States.

In bottom-line terms, two-way merchandise trade between Canada and the UK surpassed $24 billion in 2007, with the UK accounting for $12.9 billion of exports from Canada, with gold, uranium and nickel - together with higher exports of aircraft and telecommunications equipment - sitting high on the list.

In yet another indicator of the strength of Canada-UK relations, the UK ranks second in Foreign Direct Investment (FDI) in Canada. UK investment stock in Canada was valued at nearly $55 billion in 2007, up 37 per cent on the previous year. The UK is also the second largest destination of Canadian Direct Investment Abroad (CDIA), with Canadian investment stock valued at $ 54.6 billion (10.6 per cent of the global total), in 2007 positioning Canada as the second largest investor in the UK.

Much of Canada's global success is attributed to its strong economic fundamentals, including budgetary surpluses for nine consecutive years; low inflation; strong employment and GDP growth. In 2006, GDP growth outpaced other G7 countries (2.7 per cent), with Canada the only member to register a budgetary surplus; the national unemployment rate reached a 30-year low (6.3 per cent average); and government debt continued to fall.

Taking advantage of low inflation and business costs and steady economic growth, a line-up of about 650 UK companies have set up operations in Canada, with subsidiaries totalling some 1,200 and employing more than 70,000 people across 20 different industries, generating annual sales in excess of $15 billion. In turn, more than 560 Canadian companies are located in the UK, a base increasingly used as a springboard to commercial opportunities elsewhere in Europe.

Of note, the latest annual report card, Canada's State of Trade: 2007, produced by the Office of the Chief Economist, credits the 'openess of the Canadian economy and the importance of international trade' for the leap in both inward and outward foreign direct investment. Globally, Canada's merchandise exports hit $449.7 billion (2007), up 2.1 per cent, with foreign direct investment climbing 14.4 per cent to $500.9 billion. Canada, in turn invested $514.5 billion abroad. These figures represent the continuing importance of inward and outward investment to the Canadian economy.

Canada and the UK - as members of the North American Free Trade Agreement and the European Union respectively - also co-operate closely to ensure that regional trading arrangements do not become inward-looking or closed.

Science and Technology Co-operation

Canada's science and technology (S&T) partnership with the UK also continues to flourish, underpinning dual goals of strong yet sustainable economic growth. Indeed, the UK is Canada's second largest partner worldwide in the S&T sector, with a particularly close relationship in the field of clinical research, accounting for more than a quarter of all scientific collaborations. Another 15 per cent are in biomedical research, indicating a strong collaborative pattern in health research, with earth sciences and physics also a recognised strength.

The Government of Canada is committed to robust and holistic growth, as mirrored in its S&T Strategy, Advantage Canada: Building a Strong Economy for Canadians, unveiled in May 2007. This strategy focuses federal support for research and development in key areas of natural resources, the environment, health and information technology, as part of a long-term economic plan. The government, working closely with a broad range of provincial and federal research organisations and universities, has helped introduce Canadian scientists and policy-makers to their most appropriate UK counterparts.

Another priority for the Government of Canada is technology transfer, and it maintains close links with technology transfer offices at academic institutions across the UK.

Canada and Britain's policy priorities for S&T are similar; they are grounded in innovation strategies and underpinned by increased funding allocations in support of science and technology.

The research priorities of the two countries also have much in common, and there is a shared and growing tendency to concentrate resources in large, collaborative, interdisciplinary programmes such as genomics, stem cell research, e-science, sustainable energy and clean technologies.

Canada works closely with Trade Partners UK and national and regional trade associations to promote R&D partnerships at the industrial level. Bilateral activities include seminars, workshops, two-way business delegation visits and one-on-one partnering meetings at industry conferences.