Yes. The competitiveness equation is something from a company perspective that includes a large number of things, but the economists usually narrow it down to the relative costs of production, and what goes into that mix is any movement in the exchange rate. That would determine the price that you're able to sell, let's say, to an American buyer.
The bigger picture of this story, as we discussed in a speech last week, is that the rise in Canada's terms of trade that has happened in the last five to six years has in fact been an important gift to Canada. It's primarily resource prices that are high, oil in particular. When foreigners are spending more money on the things we're exporting, that's just more money that gets spent in Canada.
One of the consequences of this is that it tends to carry with it a higher currency. I liken that to walking your dog on one of those stretchy leashes. The terms of trade are the owner, and the dog is the exchange rate, and it zigzags around it, but they eventually leave the park together. The footprints look like an economist's chart, which means.... So you get the idea. They tend to be related over the long term.
The fact that our terms of trade today are about 25% higher than they were on average in the 1990s is a very significant development. It means approximately 7% more income in aggregate for Canada as a whole. This is pretty significant. One of the consequences of that, and one of the ways that gets spread around, is that the Canadian dollar goes up with it.
If you're a manufacturer in that mix, you have two things happening. The U.S. had this massive downturn, so you lost perhaps 40% or 50% of your export orders, on top of which the Canadian dollar drifted up over the course of that recession, because the price of oil was still rising. Those two things made it very challenging for that sector. As the U.S. cycle comes back, that's half the problem. The other half remains for our companies that over a long term have not been able to overcome those conditions with stronger productivity growth or other cost-saving measures.
That's why we say that about half of our export sector is labouring under that deterioration in competitiveness, and it for sure will take longer for them to gradually rebuild that, possibly through finding new customers in other growing markets, in Asia and so on.