Why is Canada a Great Trading Nation?

A trading nation is such a place where international commerce constitutes a large percent of its gross domestic product. The word ‘trading nation’ was first used in the early 1970s by the economist Alvin Rabott, who was examining the characteristics of the emerging nations and trading partners. Since then it has become a widely accepted term. Trading nations include numerous countries that are known for their strategic location or balance of trade, including China (an ex-communist country), India, South Korea, Taiwan, Norway, and Chile. These nations make up over 40 percent of the world’s trading volume. While many other nations have varying degrees of economic performance, these trading nations all possess a remarkable degree of respectability and dependability in international business circles.

In the United States the trading nation concept is widely accepted and understood. The main reason for this is the large volume of goods that the United States exports, which dwarfs the rest of the world’s export data. For example, in the last decade the United States exported an amount equal to more than three percent of the GDP of the rest of the world. Because of these unparalleled levels of exports, the United States is generally considered to be a trading nation.

But what is it that makes a nation a trading nation? Consider if you will Canada, which is widely recognized as a trading nation and a valuable partner to the United States. While a small percentage of Canadian exports go abroad, the vast majority of them (over two hundred thousand dollars in sales every day) go to the United States, making it a significant trade partner in the eyes of many. Canada is not a financially stable nation and as a consequence has a massive net deficit in terms of spending on imports. In addition to this, Canada is a relatively open country when it comes to trading with the rest of the world, allowing goods and services from other countries to reach markets within Canada rather than having to bypass through the United States and other countries altogether. For these reasons and many more, Canadians have come to view themselves as a great trading nation and are regularly buying and selling with the United States.