I know I have been absent for quite a while, but it was due to family priorities. I am coming back with a short but acute issue: can Canadian trading houses be competitive on the international scene?
The question might seem silly at first glance, but consider the following: European trading houses can have their operational credit at Euribor + 75 points, while in Canada we can be happy to get prime + 1%. When trading in commodities this can be the difference between profit or loss.
Moreover, the credit insurance rates are approximately, on average, four times less than what EDC (or any other credit insurance company) is offering in Canada.
We do have some advantages: a strong supply management and other protectionist legislation, which always creates niches for those who know how to exploit such regulations.
What would happen if we were living in a truly globalized trading environment?
This is the stuff of nightmares... I guess.
Tuesday, July 26, 2011
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