The Coronavirus crisis reveals that most countries are vulnerable to breaks in the international supply chains of essential medical products for the fight against the coronavirus. Canada is no exception, as the recent controversy caused by US President Donald Trump when he asked 3M to stop exporting masks to Canada to ensure that the United States shows are not lacking. Although the problem has been resolved quickly and the 3M masks continue to be shipped to Canada, it is interesting to examine Canada’s dependence on the United States for all medical products.
We have studied the information published by COMTRADE, a database managed by the United Nations which tracks bilateral trade for nearly 200 countries and 5,000 product categories. Some categories are larger than the specific products for which we wanted information, but they have the advantage of providing internationally comparable data.
Masks for Doctors and professional workers
Masks for healthcare professionals, such as the now-famous N95 masks, are essential in the fight against the Covid-19 pandemic, but those used in Canada are generally imported. In the COMTRADE data, they are found in the categories “breathing apparatus and gas masks” and “protective masks without mechanism”.
In 2018, Canada imported approximately $ 126 million and exported masks for professionals for $ 54 million. Of these, 90% were from the United States. This figure includes direct exports to Canada of masks produced in the United States and re-exports of masks made in other countries that transit through the United States.
Canada imports these masks from a handful of countries, which explains the concern of our authorities when President Trump threatened to curb exports of these products. The U.S. and Canada have finally reached an agreement that maintains the mask trade, but the Trump administration’s unpredictable decisions may affect other essential goods in the future.
Covid-19 Products
The WTO recently published a list of essential products in the fight against coronavirus. We tracked 75 of these products in COMTRADE data. Let’s call them “Covid-19 products”. In Canada, Covid-19 products represented 3.9% of total imports in 2018, compared to 5.8% in the United States. In this list, there are drugs, immunological products, medical, surgical or dental instruments and plastic products, among which, certain types of masks. The list of imports of Covid-19 products differs from country to country, reflecting the different production structures.
If we focus on the trade balance (the difference between exports and imports), the two countries had a trade deficit with the rest of the world – more imports than exports – for Covid-19 products in 2018. Many Covid-19 products are traded bilaterally between the United States and Canada. In 2018, 54% of all Canadian imports of Covid-19 products came from the United States, while Canada represented only 6% of American imports of these same products. Overall, Canada has registered a trade deficit with the United States for these products (although this is not the case when considering all manufactured goods).
Canada’s dependence on the United States is not limited to masks for professionals. Over 75% of Canadian imports for 32 Covid-19 products are from the United States. Some of these products are only rarely exported by Canada, which suggests that the country could not easily replace foreign supply with domestic production. Among these products are drugs containing penicillin, photographic plates, and films for x-rays, laboratory, hygienic or pharmaceutical glassware, syringes, needles, and catheters.
On the other hand, there are only four Covid-19 products (hydrogen peroxide, often used as an antiseptic, certain type of drugs that contain antibiotics or vitamins and soaps) for which at least 30% American imports come from Canada. Given its dependence on a large number of Covid-19 products, Canada cannot afford to escalate trade hostilities with the United States. However, the situation may not be as grim as the figures seem to suggest.
Masks in public
When they start reopening, various governments may continue to recommend that citizens wear the mask in stores or on public transportation. Canada, and Quebec in particular, has a strong textile industry that could easily produce masks. Canada is also a major supplier of certain products needed to fight coronavirus in the United States, as Prime Minister Justin Trudeau recently noted.
Among them is the red cedar pulp used to make medical gowns and masks, which is mainly produced by Harmac Pacific in British Columbia. COMTRADE data also shows that Canada supplies certain products to the United States, which are not much exported and rarely produced. These include antibiotics other than penicillin, sterilizers for medical, surgical, or laboratory use as well as electrocardiographs.
In times of crisis, it is easier to ensure rapid deliveries, when necessary, with geographically close business partners and with whom we have a relationship of trust. For these reasons, maintaining harmonious relations between Canada and the United States is important for both countries.
Although the controversy surrounding the 3M masks was quickly resolved, this episode remains an eloquent illustration of the need for Canada to find compromises with its neighbor to the south regarding trade in Coronavirus products.