Global business is changing; the international marketplace is now a platform for investment, technology partnerships and trading relationships.
Consequently, Canada’s ability to do well economically pegs on its ability to tap into these new changes. One of the ways to facilitate this is through a proper understanding and engagement with international economic communities.
Relationship between international economic communities and Canadian business
On a general level, these communities have a direct effect on the nature of opportunities available to Canadian businesses. This is because they can alter the trade barriers prevalent within a certain region or country of the world. When this occurs then the interests of Canadian businesses will be accommodated. Additionally, some countries may offer subsidies for certain internationally oriented goods and this makes it unfavorable for businessmen and women in Canada. To this end, economic communities often work towards decreasing or eliminating these barriers.
They also try to reduce other market related government interventions that may make business unfeasible in those countries. Market accessibility and risks inherent in a certain region can also be highly affected by a country’s policies. International economic communities therefore assist in reduction of tariffs on goods and services that attract Canadian businessmen (Amato & Laudati, 54). The communities also help in forging partnerships with countries so that trading in those areas can be more predictable. These communities often expect members to be transparent in their endeavors thus making those member states very feasible target nations for business.
The largest trading partner in Canada after the United States is the European Union; an issue brought on by the integration of 27 countries in Europe. Canadian businesses therefore have a lot of vested interests in the European Union. However, a more direct reason for interest in this region lies in the fact that it is also a trading community.
One of the ways in which Canada has benefited from the European Community is through drafting of agreements such as the Science and Technology agreement signed in 1996. Technologically oriented businesses from either country can therefore benefit by exchanging information and resources (Hoekeman, 25). The EU as an international community also provides Canadian businesses with immense investment opportunities since the rules applicable in the entire region are unified. Canada has had a long history of cooperation with the European Union as a trading partner. They first started in 1976 when the European Economic Community signed an agreement with Canada (Foreign Affairs and International trade Canada (a), 13).
This was done in order to enhance the degree of economic cooperation between the latter two nations. Thereafter, Canada and the European Union created a declaration in 1990 that would allow transatlantic relations to grow between these two nations. Six years later, they would then enter into another declaration that soon came to be known as a joint action plan between the two countries. The trade and investment enhancement agreement also came into place in 2004(Foreign Affairs and International trade Canada (b), 9). This bilateral arrangement assisted in dealing with certain issues such as financial investment, SMEs and e-commerce.
However, after 2006, the latter agreement was put to a halt and this may continue later. The EU and Canada are currently negotiating free trade agreements. On the other hand, it should be noted that objections have not just been raised by Canada against the EU. The EU has also spoken against the requirement imposed by Canada against citizens of the Czech Republic who are required to enter the country with visas. The European Union has argued that this is at odds with the pattern of economic cooperation that Canada and the EU have had so it has requested that Canada should reconsider this decision.
On the other hand, the European Economic Community has benefitted its member states more than it has helped some non EU businesses such as Canadian ones. This economic community normally imposes certain bans against non EU products thus hampering accessibility. This rule is especially applicable to Canadian businesses dealing in any sealed products (Government of Canada, 43). The logic behind these impositions is to protect consumer interests within the EU. This economic community also has certain inefficiencies that are contributing negatively towards growth of Canadian businesses in the region. For instance, not all member states implement EU’s single market regulations upon joining. Also, these rules are sometimes subjected to member state interpretations.
The predictability of that market therefore gets distorted and this is not good for Canadian businesses (FAITC, 12). In line with the previous issue is the problem of trade restrictions in certain EU member states. Certain countries are quite strict about mergers and acquisitions within the European Economic Community so Canadian businesses are once again placed at a disadvantage. The World Trade Organization may also be considered as another economic community that brings together one hundred and fifty member countries. This is highly significant to Canada because all their important target markets are regulated by the WTO so this can be a major breaking or success point to the country.
WTO has helped Canadian businesses because it a platform for solving business disputes (WTO, 531). This means that Canadian investors may gain access to fairness in business. Usually, if a trading partner imposes a ban against certain Canadian products then it is the WTO that will listen to those arguments. For example, when the European Union imposed a ban on sealed products, Canada took this compliant to the WTO so as to challenge it. Even a US ban on some of their farming products was also addressed through the same international community.
The community often works towards elimination of subsidies and other impediments to free trade thus making its member states more lucrative for Canadian businesses (Easterly, 21). A lot of achievements around the world have been made in the agricultural sector owing to these efforts. It has also contributed towards the equalization of export and import based goods and services in countries such that no preferential treatment is given to one category over the other. Issues of fair competition have also been looked into through the WTO.
However, there are certain issues that can slow down progress such as the fact that reaching a negotiation takes very long (even up to seven years) and this subsequently impedes the ability of Canadian businessmen to fully enjoy the benefits of this international economic community.
International economic communities essentially contribute towards better trading environments in target markets of Canadian businesses because they eliminate barriers to trade, increase transparency and heighten market accessibility. On the other hand, they can harm business opportunities for Canadian businesses by imposing bans on non member states’ goods and services or by inefficiencies in implementation of their rules.
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Northampton: Elgar, 2008 Easterly, Wellington. The elusive quest for growth, Cambridge: MIT press, 2001 WTO. Dispute settlement, transparency and surveillance. The World Economy, 23.4(2000): 527-545 Hoekeman, Kee.
Imports, entry and foreign law as market disciplines, Centre of Economic policy research, 2004, 25 Foreign Affairs and International trade Canada (a). Canada’s international market access report. 2007. Web. Accessed on 8th November 2010 Foreign Affairs and International Trade Canada (b).
Opening doors to Europe. 2010. Web. Accessed on 8th November 2010 Government of Canada. Canada’s trade negotiations and agreements.
21st may 2010. Web. Accessed on 8th November 2010