Thank you, Mr. Chair. Bon matin, tout le monde.
As the chair indicated, my name is Jean-Michel Laurin. I am with the Canadian Manufacturers and Exporters Association. I thought I would just give you a little bit of background today in terms of the business context that manufacturers are facing these days, but also some of the business opportunities we see out there and in which this proposed free trade agreement fits.
As you know, the manufacturing and exporting sector is a significant part of our economy. You know that 16% of GDP is directly accounted for by the manufacturing sector. When you take exports into account, it's more than one-fifth of our economy that depends on our ability to trade across the world. Manufacturing is a big business in Canada, with over $600 billion in sales last year and more than $400 billion in export sales. So it's an export-driven sector. It has almost two million jobs, so it still employs a fairly large number of Canadians. These are the innovative companies. More than 75% of our private sector research and development in Canada is done by manufacturing companies. So in a large part the innovation that drives our economy originates from the manufacturing sector.
We've heard a lot in the media and in the House of Commons about the challenges that manufacturers are facing these days. It seems that we've had bad news after bad news over the last couple of weeks, whether it was the announcement just yesterday about retail sales plunging in Canada, or the previous week that Canada was in a trade deficit last December for the first time in I don't know how long. We heard as well about significant job losses in December, with 5% of manufacturing jobs shed in December, in large part due to the downturn in the market. So the challenges are there. When you talk to companies that are managing manufacturing companies these days or are doing business outside of Canada, you hear them talk about how difficult it is to manage a business when there's so much uncertainty in the market, when there's so much volatility, whether it's with currency markets or commodity markets and energy prices. There's a lot of over-capacity in the market right now for industrial goods, so I think people are concerned right now. Everybody wants to know when the market will rebound and especially when we will see a rebound in industrial goods in the United States.
One of the key issues that our members have been facing lately is access to credit. I'm sure that you've heard some of our positions leading up to the federal budget. We hope that some of the measures that are in the budget bill will be approved very soon. I think there are some significant opportunities in markets right now, but we want to make sure that our farms and our companies are in a good position to take advantage of them.
On the challenges, we'll be releasing a survey tomorrow that we did of manufacturers and exporters across Canada. One of the questions we asked them was do you expect new orders in the next three months to increase, to decrease, or to stay the same? We're quite concerned with the results. Although 18% of companies are saying they're expecting orders to increase, which is good, 27% think orders are going to stay the same, and the rest, or 56%, expect a downturn. What's even more of a concern is that 15% of companies are expecting a downturn of more than 20% in sales over the coming three months, despite the fact that sales already declined quite significantly over the last three months. So if you're looking at what's ahead in the next couple of months, I think we're going to see more job losses, more bad trade numbers, more bad news originating from the manufacturing sector, just because the demand isn't there any more for a lot of our industrial products.
Obviously, we're hoping that the stimulus package in the U.S. and the federal budget here in Canada will jump-start the economy and help us to regain some of that market. On the other hand, I think credit is the key issue, especially for Canadian companies right now, in light of the opportunities that we see in markets here in Canada, but also around the world. That's what I hope we're going to be spending more time talking about today.
Canadian businesses can now pursue business opportunities in the countries named in this free trade agreement. Currently, businesses are having to abandon market shares to competition, as some of these businesses have been more weakened by the economic situation. Many businesses believe that today's market is conducive to takeovers. In the last six years that I have been working for the association, I have never seen so many manufacturing businesses so eager to develop new export markets. It's unbelievable the number of calls we are receiving. People are seeking information and are willing to invest even if they do not have money now. Everybody is betting on developing new markets and new products. There is a realization that demands of the traditional clientele in Canada and the United States are not what they used to be; yet, there are still foreign markets which are expanding significantly. As you know, international trade data proves that very fact. Our exports towards other markets tend to grow a lot quicker than exports to the United States. I do not want to say that the United States is not important, but I believe that Canadian businesses have many growth opportunities beyond North America.
As regards specifically the proposed free trade agreement, 35% of the growth in value of our exports in the last 10 years can be attributed to trade with the countries that make up the European Free Trade Association. For last year alone, growth in value was 7%. This is a small figure relative to total trade, since a large portion of our exports goes to the United States. The European market is still expanding, which is rather interesting, because that's where different types of exporters will be doing business. We export a lot of raw materials, but also a lot of manufactured goods. A few examples are aeronautics material and pharmaceutical products, etc. Those markets are diversified and developed. They are markets in which there is a demand for our products and services.
Each year, our association carries out a survey among our members to set and validate our priorities and policies. When the time comes to talk about our international trade priorities, our members always mention the signing of bilateral and multilateral free trade agreements under the WTO. This has always been a priority for our association. Certainly, our members believe that what is most important is for the government to assist in improving access to foreign export markets.
To conclude my opening comments, I want to say that CME is supportive of open markets. We need to help our exporters do more business internationally by negotiating trade agreements and by taking down trade barriers, especially in today's context.
I think that beyond the current economic circumstances we're in, companies are looking to expand in global markets. They're seeing their market increasingly as a global market rather than as just a North American market. I think this free trade agreement and the free trade negotiations about to be launched with the European Union are a huge opportunity for us in Canada to improve the competitive position of Canadian products and Canadian companies, especially when we consider our main competitor to be the United States. This is a huge opportunity for us to improve our companies' competitive position in the European market, which is a very important market.
Obviously, we also need to make sure that we have a level playing field and that we provide, here at home, the right conditions for our manufacturers and our businesses so that they flourish. Again, we have high expectations with regard to the European Union deal. We're seeing this as another deal with a European free trade area, and we're hoping that it's going to pass very soon so that we can focus our efforts on the bigger picture, which is the free trade negotiations with Europe.
Just to conclude, I think this free trade agreement is a step in the right direction. A free trade agreement with the European Union would be another great step in the right direction, but we shouldn't say that once we've done that, we're okay. I think we need to work more closely with the government to make sure that the resources are out there to help exporters get into these markets. Obviously, if you have, for example, tariff reductions or tariff eliminations for industrial goods, that is a huge plus for companies that are trying to get into that market, because they will be more price competitive. On the other hand, there are a lot of small and medium-sized companies right now that are looking to expand beyond their traditional markets. The free trade agreement is, as I said, a good step in that direction. But we need to pull more resources together to actually help companies get over there and grow into that market. Our economic future depends on our ability to trade globally, and the European market is a significant part of that.