According to Worldwater.org, Canada has the third-largest supply of renewable freshwater behind Brazil and Russia. Yet the Canadian government has long forbidden any exports of water, declaring the commodity a strategic resource. Instead, Canadians are allowed to sell bottled water products including mineral waters, aerated waters, ice and snow.
Canada's Water Deficit
In 2008, Canada exported US$36.6 million worth of government-approved water products while paying $79.2 million worth of imported water. Instead of a prized competitive advantage, water contributed a $42.6 million deficit to Canada’s international trade account.
For the first 10 months of 2009, Canadian exports of bottled water plus ice and snow fell 36.4% to $21.4 million compared with $33.7 million for the similar period ending October 2008. Canadian imported water products dropped 18.7% to $57.5 million, generating a $36.1 million deficit going into November 2009.
Canadian Exported Water Sales in 2009
Below are the statistics for unsweetened water exports from Canada to its top 10 customers during the first 10 months of 2009. Shown within brackets are each country’s percentage of total Canadian exports and the percentage change from the 10 months ending October 2008.
- United States … US$13.1 million (61.4% of Canada’s water exports, down 50.1% from 2008)
- Japan … $5.7 million (26.7% of total, up 21.4%)
- Taiwan … $1.7 million (7.8% of total, up 5.6%)
- China … $248,621 (1.2% of total, up 88.3%)
- Hong Kong … $157,574 (0.74% of total, up 838.2%)
- Cambodia … $79,715 (0.37% of total, up 356.1%)
- South Korea … $73,878 (0.35% of total, down 67.6%)
- United Kingdom … $65,751 (0.31% of total, up 405.5%)
- United Arab Emirates … $54,886 (0.26% of total, up from nil in 2008)
- Norway … $48,770 (0.23% of total, down 60.7%).
Despite the overall 36.4% fall in overall Canadian water shipments, Canada was able to grow its H2O exports to 4 Asian countries plus the U.K. by amounts ranging from 21.4% for Japan to 838.2% for Hong Kong.
Sales of Imported Water Products in 2009
For the first 10 months of 2009, Canadian imports of bottled water from France exceeded total Canadian water exports to the world.
- France … US$24.6 million (42.8% of Canada’s water imports, down 16.9% from 2008)
- Italy … $16.9 million (29.4% of total, down 12.50%)
- United States … $7.6 million (13.2% of total, down 33.5%)
- Fiji … $3.4 million (5.9% of total, down 26.6%)
- Portugal … $894,024 (1.6% of total, up 4%)
- Norway … $719,572 (1.3% of total, down 14%)
- Germany … $691,886 (1.2% of total, down 18.9%)
- Poland … $614,419 (1.1% of total, down 16.2%)
- Iceland … $360,607 (0.6% of total, down 2.5%)
- United Kingdom … $230,739 (0.4% of total, down 35.5%).
Among the top 10 suppliers of water products to Canada, only Portugal was able to grow its sales as of October 2009.
Competitive Advantages in Bottled Water Sales
The dollar value of water exported from Canada to the U.S. was $5.5 million more than what Canadians imported in American water products. This represents a competitive advantage for Canada that is in decline, given the 50.1% downturn in Canadian water exports to America as of October 2009.
More troubling is the fact that overall Canada is a net importer of bottled waters. That is, Canadian H2O imports of $57.5 million exceeded exports of $21.4 million by $36.1 million during the first 10 months of 2009.
Why should the world’s third largest owner of freshwater run a $16.9 million water trade deficit with Italy, a $12.9 million deficit with France and a $3.4 million deficit with Fiji? Among those countries, Canada was only able to negotiate $11.7 million in exported water sales to France so far in 2009.
Customs Duties on Imported Water
The international 4-digit harmonized system (HS) code for unsweetened water is 2201.
Bottled natural mineral waters (HS code 2201.10.00) and aerated waters (2201.90.00) are duty free.
Only ice and snow are subject to a 6.5% tariff duty under the Most Favored Nation (MFN) treaty, and a 3% charge under the General Preferential Tariff.
While the Canadian government restricts water exports claiming the commodity is a strategic resource, Canada’s Department of Finance could further protect domestic water industries by imposing a customs duty on imported water shipments coming into Canada.
Sources: Industry Canada's Trade Data Online, based on Statistics Canada reports as of January 11, 2010 and Canada Border Services Agency's online customs tariff manual.
Daniel Workman - A senior business and finance writer who also does French translations, notably international trade and insurance materials.
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