1. Flow of Goods and Services
Imports, such as raw materials, processed material, semi-finished goods, and manufactured products, flow into Canada. Goods and materials also leave Canada as exports.
The importation of goods and materials provides, more or less, jobs for Canadians.
See Figure 4.2, “Canadian Imports and Exports for 2005”, on page 129.
BALANCE OF TRADE
Countries usually try to reduce high trade deficits because it means money is flowing out and fewer jobs are being provided.
A manufactured good surplus can be good because the domestic production process means more Canadian jobs.
In 2005, Canada had a trade surplus of just under $65 billion; as a result of the $85 billion trade surplus with the U.S. that countered the $20 billion trade deficit from all other international trading.

2. Balance of Trade
To maintain a healthy balance of trade, countries try to import the same total value of products that they export. An imbalance of the two results in the following:
a trade deficit in which a country pays more for imports than it earns from exports
a trade surplus in which a country earns more from exports than it pays for imports

3. Five Ways to Offset the Risk of Importing Measure consumer interest.
Imports
Five Ways to Offset the Risk of Importing
Measure consumer interest.
Use care when selecting foreign suppliers.
Learn about a foreign partner’s culture.
Carefully scrutinize the purchase agreement and then sign it.
Check goods for quantity and quality upon arrival.
Exports
Direct exporting is exporting a product directly to an importer without using an intermediary. Indirect exporting is exporting a product to an intermediary who then conveys the product to the importer. Larger established companies usually use direct exporting while newer ones utilize indirect exporting.
IMPORTS
See figure 4.3, “Five Ways to Offset the Risks of Importing”, on page 130.
EXPORTS
Established companies usually export directly.
Businesses that export directly often set up offices and sales staff in foreign countries or send a sales representative to the country.
Many new companies use indirect exporting as they do not have the resources to establish abroad.
Intermediaries are familiar with regulations, restrictions and culture.
Intermediaries handle paperwork, collect money, and can assume risk.
Some countries such as the Middle East, Central America, and Asia do not allow direct exporting, probably to create domestic jobs.

4. Exporters reduce risks by planning carefully. As part of their plan,
Offsetting Risks
Exporters reduce risks by planning carefully. As part of their plan,
they conduct market research to ensure that there are consumers for their goods and services.
Canada’s Major Trading Partners
Canada’s number one trade partner is the United States.
Three major reasons for trading with the United States include
low cost shipping due to proximity
similar cultures (language, interests, product interest, and so on
a market that is 10 timers larger than the domestic one
EXPORTS
Offsetting Risks
Sources of information to reduce risk include:
Foreign Affairs
International Trade Canada
Internet
Asia Pacific Foundation of Canada
Canadian Manufacturers and Exporters
Canadian Association of Importers and Exporters
Canadian Embassies
See questions that embassy staff suggest foreign clients might ask, on page 131.
CANADA’S MAJOR TRADING PARTNERS
A Canadian product or service sold in both the Canadian and U.S. markets will be far more profitable than a product sold only in Canada.
See Table 4.2, “Canada’s Top 10 Export & Import Markets by Country, 2005”, page 133.