Thank you, Mr. Vice-Chair. It is an honour to meet with this committee.
As you know, international trade has certainly moved to the forefront of both policy-makers' and the business community's minds.
Just for some background, the chemistry industry is a vital component of the Canadian economy. We're the fourth-largest manufacturing sector, with about $53 billion of annual shipments. Many of us don't give much thought to the role of chemicals in the economy, but more than 96% of all manufactured goods are touched by the business of chemistry, and that of course includes the key sectors of the Canadian economy: energy, transportation, agri-food, minerals, and mining, just to name a few.
In my brief time with you today, we have just three messages we want to share with you.
First, the global chemistry industry is a large, fast-growing industry that has deeply interconnected patterns of trade. Annually, global chemical trade is at about $5 trillion with growth rates far in excess of global GDP. We're looking for that number to reach $6 trillion by 2020. To put that number into context, Canada currently occupies about 2% of global production.
Three major trends that are driving that increase in chemistry demand are, of course, global population growth; the pursuit of quality of life, middle-class lifestyles by the growing populations in Asia; and the aggressive pursuit of more sustainable outcomes in terms of clean air, clean water, and clean energy by all citizens of the planet. This is the key. Those trends all together mean that you're looking at a chemistry industry that will nearly triple by 2050, which is not that far away.
Already today chemicals are amongst the highest traded commodities worldwide. About 40% of global chemical production is shipped internationally. It's clear that free and fair trade in chemicals will remain of vital importance for this industry to realize the contributions that are being demanded from it in the coming decades.
My second point—and I guess this perhaps echoes a bit of what was said by CAPP— is that the Canadian position within this highly integrated global sector is currently at an inflection point. Our sector is highly integrated with the global industry. We export about 40 billion dollars' worth of our products each year. That's second only to transportation of equipment in the manufacturing space.
On the other hand, we import about $50 billion. When we look at the United States, our trade is almost completely balanced, with about $30 billion of exports and $33 billion of imports. We can't take that balance for granted, however. In particular, the abundant availability of low-cost natural gas in recent years has meant that we have seen over 300 global-scale investments in the chemistry industry in the United States totalling about $250 billion of new plants and equipment. That certainly is going to put pressure on Canada's historical export share in that jurisdiction.
At the same time, we know the new administration in Washington has embarked on a very aggressive round of reforms in not only trade policy but also taxation policy and regulatory policy. We don't know—any of us here—the outcomes of any those specific initiatives, but what we do know is that the United States is determined to make a more competitive business climate for its manufacturing and private sector businesses in the coming years.
Taken together, and absent a coordinated, appropriate response from Canadian policy-makers, Canada will continue to struggle to attract its historical share of investment into the chemistry sector.
My third point is a bit more hopeful. There are opportunities to change the current pathway and to allow the chemistry sector to flourish and make important contributions to both the domestic economy and the global environment. We in Canada have an embarrassing richness of the lowest carbon chemical feedstocks on the planet. For Canada to seize the opportunity and to attract a fair share of the significant investments that are taking place in that sector, we need to focus on three priorities.
First, we have to prepare to negotiate a modernized NAFTA. You've received a copy of a tripartite statement that our association, along with our U.S. and Mexican counterparts, published in early March. To our knowledge, we're the only sector that has reached a consensus opinion across all three jurisdictions on our positions for NAFTA negotiations. We continue to delve into the details of what we're looking for.
In brief, NAFTA has allowed for duty-free trade of all chemical products, which has incentivized the growth of complex supply chains, helped lower the cost of chemical production, and strengthened the sector overall in the global marketplace.
We support the whole-of-government approach to NAFTA negotiations that the federal government has embarked upon and continue to offer our support through established channels. We do see an opportunity. NAFTA was developed in the early 1990s. There are aspects that can be negotiated and strengthened.
Certainly the first of those would be to maintain current tariff-free trade for qualified products, improve rules of origin requirements, facilitate customs, and enhance regulatory co-operation and harmonization among the jurisdictions.
I think I'm being told that's about it.