A new report says increased international trade will provide the pressure and benefits to make Canada more innovative and competitive and urges governments to encourage new and deeper trade relations.

Issued by the Institute for Competitiveness & Prosperity, it argues that Ontario (which supports the institute) and Canada are under performers in innovation and must focus on boosting international trade before low-cost competitors begin to challenge this country's competitive advantage in producing sophisticated high-value goods and services.

The reports notes that although developed nations like Canada compete on the basis of innovation, recent growth in Canada's trade volume has been driven by low value-add commodity exports. It states Canada needs to take aggressive steps to boost trade before emerging nations like China and India reach an "innovation tipping point".

"In time, (China's) innovation capacity will develop further and China will become a more sophisticated competitor to our businesses and people. Clearly, Canada needs to step up its innovation capabilities now," states the report.

The report says its research indicates that the rise in the Canadian dollar and not the steep rise in low-value imports are the main contributor to the steep decline in Canadian manufacturing jobs - more than 300,000 lost between 2002 and 2008. Expanding trade will help create high value-added jobs at home and prepare Canada for future competition from emerging nations as their economies become more innovative.

Some of the necessary actions to stimulate greater trade include:

* a greater emphasis on negotiations for "enhanced trade" with emerging nations and the European Union;

* upgrading of infrastructure at borders, seaports and airports;

* increased investment in education to expand the pool of creative skills;

* drawing on the skills of Canadian immigrants; and,

* wage insurance to help workers adjust to lower paying jobs.

A copy of the report can be found at: www.competeprosper.ca.

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