Data can be interpreted several ways

Continued from FP1

A survey of world-leading economists run by the University of Chicago Initiative on Global Markets examined this question three years ago and asked several dozen economists whether a country can improve the welfare of its people by changing trade surpluses or deficits.

The percentage who strongly agreed: zero.

In any event, Canadian officials tend to use U.S. data to make their case that Canada is on the negative side of the ledger, and the Bureau of Economic Analysis has calculated the U.S. had a US$7.7billion surplus in 2016.

But Statistics Canada data show it’s Canada with the surplus in goods and services, totalling $18.8 billion (US$14.6 billion) last year.

That’s a US$22.3 billion difference between the two measures.

The debate isn’t academic. The two countries, along with Mexico, are renegotiating the North American Free Trade Agreement, which Trump says needs to be corrected for trade imbalances.

MacNaughton zeroed in on the issue last week when he took to Twitter in response to Trump. The ambassador also noted a US$36-billion U.S. surplus in manufacturing in an interview Thursday, again citing American data.

“If what the U.S. is interested in is trade balances, I’d really like to see some proposals come as to how to right the trade balance between Canada and the United States, which is in your favour.”

To be sure, it’s not clear what the bottom line would look like if the two measures were harmonized, or which methodology better reflects the true state of trade between the two countries.

Maybe what the discrepancy between the two national measures is showing is neither side is right. If commercial flows can swing between surplus and deficit depending on how it’s measured, that could be a rough indication the trade relationship between the two countries has become balanced, more or less.

Whichever data is used, the deficit (or surplus) is still relatively small compared to total trade between the two countries — between 1 and 2 per cent. And that’s a big change from the past when the trade balance was clearly in Canada’s favour.

The $18.8-billion surplus estimated by Statistics Canada for 2016 is the smallest since 1994, the year NAFTA came into effect. Since then, Canada’s cumulative surpluses have totalled $1.2 trillion, the Statistics Canada figures show.