Friendshoring: Canada in global trade

Friendshoring represents an important economic opportunity for Canada and Canadian workers, according to the Canadian government.

As a stable democracy with a skilled workforce and a rich endowment of natural resources, Canada has a solid foundation as a supplier of critical goods to its allies.

The Canadian government believes that building on this foundation will require investments in Canada’s economic capacity, both now and in the future.

Canada must cope with a fundamental shift in global trade patterns.

For much of the past three decades, the global economy has been increasingly interconnected.

While economic integration reduced the costs of many goods, it also created a global trading system vulnerable to disruption of critical supply chains.

For Canada and its democratic partners, the vulnerability created by reliance on authoritarian regimes for critical goods is no longer sustainable.

Russia‘s militarization of energy exports has forced the world’s democracies to fundamentally rethink the vulnerability of their supply chains.

Moreover, according to the Canadian government, China now dominates key parts of clean technology supply chains, including batteries.

Friendshoring

The Canadian government also posits that mitigation of these vulnerabilities by the world’s democracies will require a realignment of global trade and the shifting of critical supply chains from dictatorships to democracies such as Canada’s.

The need for investment to manage these structural challenges will not be limited to one sector or one aspect of the economy.

Broad-based investment will be needed to grow Canada’s economy and create good middle-class jobs in the years ahead.

The magnitude of investment required is enormous and the private sector alone is unlikely to mobilize the level of capital required in Canada at sufficient speed.

Many of the required investments will take decades and involve high upfront costs.

In addition, key sectors and technologies will have important spillover effects by driving the development of related industries.

For example, key inputs for clean production and clean technology production, such as electricity, critical minerals and carbon capture, utilization and storage, will lay the foundation for an expanding clean economy.

For related sectors, such as hydrogen and clean manufacturing, this will boost their productivity and support their resilience, as well as help generate new middle-class jobs.