Mr. Chairman, thank you for the opportunity to meet with this committee as our bilateral relations with the U.S., in the context of its new administration, have jumped to top of mind.
The chemistry industry that I'm representing today is an invisible but vital component of Canada's economy. As my friend next to me was talking about back and forth, we're looking at a couple of $4-billion investments in Alberta that will produce the raw materials that become auto parts, and lightweight auto parts specifically, to reduce CO2 emissions. The value chains get longer and longer and better and better.
Chemistry is pretty invisible as a component of Canada's economy, but it's the fourth largest manufacturing sector with $53 billion in shipments. I've left each of you with an information package that shows our size, our regional characteristics, and some of our subsector characteristics.
Forty billion dollars of our production is exported each year. That's second only to transportation in the whole manufacturing sector. Not many people know that we're the second largest exporter. We import $50 billion. In the Canada-U.S. situation, three-quarters of our exports and two-thirds of our imports are with the U.S., to or from. We're about balanced. It's in the range of about $30 billion to $32 billion each way, and it varies from year to year. Every one of our members trades. We know what trade is about.
Our sector is proud of its highly skilled workforce. Thirty-eight per cent of our 87,000 employees are university graduates. That's second only to the IT sector. Our average salary at just over $80,000 is about one and a half times the manufacturing average.
In my brief time with you today, I want to share several key messages on behalf of the chemistry sector, but before I get to some of the points, I want to get to a couple of the conclusions.
With the U.S. system and the tactics we're observing, let's just agree to understand the terrain. I think you do, from what I heard earlier, but I'd better be on the record. The President and the administration have a role to play, and frankly, an important but sometimes deliberately distracting one. It's well worth separating tactics from lines of authority. There are some rather murky checks and balances in the U.S. governance system, and they're there regardless of what the social media say. Our discussion with key Congress and U.S. Senate leaders suggests that they know their jurisdiction, and they're not about to cede that jurisdiction to this or any other president, past, present, or future.
That said, there's considerable disagreement over the real power and executive authority. Just look at TPP for one example of that. This is not an area where we have expertise, but I just want to say that our concern regarding commercial relations is that we not take our competitiveness for granted. While the new administration is focusing on winning, on facilitating winning, and on reductions of regulatory burdens, what are we focusing on? There's one thing that needs to be obvious to all Canadian policy-makers at the federal and provincial levels, and that is that we can't afford to take for granted our competitive position and our trade relationship with the United States.
The United States administration is deliberately engaging in one of the key tactics in the book The Art of the Deal; it is keeping the other side off balance. While it's impossible to attribute motives and tactics, the only thing new is the tendency to talk win-lose in the media, and seriously, is that really new? This is our neighbour. We know them. We know their tactics and we know how they work. It's the job of leadership here to fight for Canada, for investing here, and growing our economy and breaking us out of this anemic sub-2% GDP growth band that we seem to have slipped into.
Let me turn to the specific opportunity from a commercial relations perspective as we look specifically at NAFTA.
First, let's look at the larger global chemistry industry. It's large, fast growing, and deeply interconnected. Over half of world trade is intra-company. Annual sales in this sector are well over $5 trillion U.S., with growth rates well in excess of global GDP. To put that in context, we're 1%. We're about 2.5% in trade, but we're 1% of the global industry. Further, the sector does trade more than any other manufacturing sector, and there we're not number two. Globally, this is the largest trading sector, over $2 trillion, 40% of global production trades.
Free and fair trade in chemicals will remain a very important component of this industry if it's going to realize the contributions demanded from it in the decades to come. We are solution providers in a lot of areas of need-to-address issues.
My second point is that Canada's position within this highly integrated global sector is at an inflection point. I gave you the trade numbers. They are material. However, our relatively balanced trade in chemistry with the United States shouldn't be taken for granted. The availability of low-cost natural gas arising from the shale gas phenomenon has resulted in 300 global-scale chemistry investments, with a value of $250 billion in the U.S. in recent years. These projects are new capacity. They're export oriented and they're likely to displace significant exports from Canada as our biggest market becomes our biggest competitor.
We tracked or matched the U.S. for the last 45 years—I've put the data together—at roughly 10% in investments, but in the last five years, while the U.S. has surged with the $250 billion in new investments, we have sputtered to 1% from 10%.
At the same time, the new administration in Washington has purposed to embark on an aggressive round of reforms in areas like trade and taxation and regulation. We can't predict the outcome of those specific areas. They're going to tackle some things that they find have some local and natural inertias that are very difficult to overcome, but we know they are aggressively pursuing a more competitive landscape for their manufacturing sector.
Taken together, in the absence of an accord made in an appropriate response, we will be second in every investment decision in our sector, and there is no prize for being second. If we're going to retain and grow this valuable sector and our quality of life, we have to shape policy to win in Canada and make a difference.
My final point is that there are good reasons that we have developed strong trade ties with the U.S. I'll be repeating a little bit of what you have probably already heard. There are reasons that we need to make a focused effort to continue what we have in place.
Canada and the U.S. have the same lowest carbon chemical feedstocks in the world. For Canada to seize the opportunity and attract a fair share of significant investments and do it here rather than somewhere else, based on making the same thing from coal, with a carbon footprint eight times what it is making from gas, these are ways in which we can tackle global problems.
We need to respect, recognize, and focus in three areas. We have to be prepared to renegotiate a modernized and better NAFTA. Early in March, our sector, along with the Mexican and American chemical associations, delivered a three party statement to our respective governments on what we like about NAFTA and where we can go further to improve it. I shared a piece of paper on a press release. It's on our public website in both official languages. I apologize for not bringing copies with me.
NAFTA has facilitated the growth of complex supply chains. You've heard about that already. They allow products to cross our border multiple times, sometimes in ways that you might not have thought about. We are now pipelining pure ethane up from gas fields in the United States into Alberta and Ontario, converting it into polyethylene and other materials and shipping it back to the United States, so it's not just raw materials heading south. There are value chains that upset that classic vision.
Also, there are good business reasons for maintaining and growing NAFTA. We share many common economic, social, and cultural characteristics with our neighbour and trading partner.
Trading is easier with a closest neighbour. You heard that earlier. Cost of transactions, logistics, overheads are lower, profit margins.... Dealing with the United States, they pay their bills. We've dealt with countries where rule of law comes in kind of second. It's going to be nice to have a trade arrangement with some of our Asian partners, but let's not kid ourselves. A state-controlled economy is a state-controlled economy, and when urgency is set in place, there are going to be changes in what moves and why. We've had joint ventures where the electricity has been shut off for a week and we just had to deal with it.
I'll make a last point and then open it to questions. Federal and provincial governments have to pay attention to investment competitiveness. Sure, Canada reserves the right to pursue its own policy objectives, but it must take measures to maintain and enhance investment competitiveness overall at a time when competition for investment is, very simply, fierce. There is lots of investment happening. Do we want it to happen here? This isn't about another consultation, strategic table, study, or panel. This is about engaging to win investments right now.
I'll stop and welcome any questions.