Trade Agreements and Their Role for Canada

Introduction

Canada has many agreements with the world’s countries in various spheres of activities, so that to make relations on this base more convenient for further improvement in the world arena. The most of the signed and adopted agreements touch upon countries in the Western hemisphere. The Canadian aspect in trade agreements is well developed in the area of the Northern America. The country has high rates of the national approach among different spheres of internal and external trade. In this respect it is vital to admit and highly emphasize that the supremacy of the agreements signed with foreign countries is one of the main aspects in the work of Canadian government and trade organizations as well.

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As Cooper & Rowlands (2006) outline, in previous time the situation in Canada strategically changed in terms of ramping up of the military services and making a new outlook on trade relations with other countries. The thing is that the situation in Canadian economy is rather improved and having deals with this country promises great benefits for possible investors. Notwithstanding the difficulties in the social development inside the country, the economical progress in it props up against greatly elaborated position on making business relations convenient for both parties. In other words, the research provided in the paper is interesting in the details and facts which make the theme of the discussion vital for other countries.

Moreover, the use of the studies outlined in the research is patterned with specific way of regulatory methods which the government of Canada implied in the base of the national approach toward trade. Boyer & Drache (1996) looking at the situation in the markets at the time, tend to note that the situation in Canada is not so special, but can be observed as the instructive means for other countries. It is so because in this country the process of liberalization of trade and labor was not so harmful and showed the ability of the country to work out such global issues. Determining when to apply the correct method in making the economical variable sustained, the government and the business sphere of the country once found the consensus in the issue of trade relations and agreements in terms of globalization. In this respect the research is concerned with many historical facts. This is helpful in order to have surveillance on the current tendency in the Canadian trade.

Nonetheless, the research is scheduled according to the academic studies provided by a huge variety of economists and sociologists. This makes the structure of it more reliable in order to put an observer into the picture about the problem. Previous studies in the review show the prerequisites for the modern stage in trade relationships of Canada. This point is emphasized with the historical events and close partnership with the United States. This part also displays the limitations and problems with which Canada used to face. The contemporary studies promote the research of current economic activity of Canada in relation to the global conventions and agreements with foreign countries. This tier makes attempts to pragmatically evaluate the further trend of relations in the sphere of trade for the country. The next part is considered with own research finding. It is represented in the form reflections which can show personal analysis and estimation of the problem. All in all, applicable conclusion will restate the subject matter of the research and its significance with proper recommendations.

Literature Review

Hufbauer & Schott (1994) discuss in their studies the correlation of agreements between countries in the western hemisphere. The authors indicated the historical approach toward the policy-making mechanism concerned with the trade sphere. Evaluation of the Canadian business reflects previous legal international agreements signed in the pre-war and post-war time. The study contemplates the significance of the North American Free Trade Agreement (NAFTA). The thing is that this particular act gave opportunities for the developed and poorly developed countries in the area to find out decisions for trade issues. In terms of Canada it was assumed mainly with its bilateral approach. By this one should understand the historically proved basis for the development. Closeness of boundaries and ways for the political and economical fields of participation made the agreement between two countries possible.

Thus, the study is indicated with particular events which were the stimuli for further elaboration of trade relations in the western hemisphere. Previous research reckons with the Reciprocal Trade Agreements Act (1934). It is considered by the authors as the beginning of the constructive dialogue between countries in this part of the world. Bilateral agreements of the USA with Canada were then signed in 1935 and in 1939. After the World War II the negotiation between Canada and the USA was not successful in the beginning. Truman’s administration in 1948 attempted to make some secret agreements on a free trade area. However, the authors admit that there were some drawbacks for Canada in supposed losses. In the year 1958 the situation improved with signing the Defense Production Sharing Agreement. Then the relations between the United States and Canada improved in the automotive sector (1965). Free Trade Agreements (FTA) were at a core in the second half of the twentieth century. Canada succeeded in making attempts to positively promote several values for the partners and the US, particularly. It was done for serving as a guarantee in the state markets and country’s access to the international market.

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The Canada-US Free Trade Agreement (January 1988) was the point since which the constructive relations between countries began growing on the mutual equality and priorities of the countries in trade relations. However, the authors insist that the common effectiveness of the relations between major countries in the North America were stated after signing of the NAFTA with far-reaching implications and amendments in the document. It included points which gave access for the US and Canada to the automotive market of Mexico which was protected for a long time. It also includes some improvements in the farm market between three countries. All in all, Hufbauer & Schott (1994) state that sequential development of the Canadian economic integration was not easy but appropriate for the country’s main goals.

The bilateralism between Canada and the US in early post-war period of time was researched by Aronsen (1997). The author makes a survey on the relations trends between two countries in the period from 1945 to 1954. Observing the points of General Agreement on Tariffs and Trade (GATT) the author sees for the obstacle which appeared between two countries. The provided policy at that time by two governments confronted with the dollar gap and the economical crisis which was inflicted by the end of the war. The creation of International Trade Organization (ITO), a formal body for the regulations in trade, was made for resolving disputes and problems in this sphere in 1947.

In the period of last ten years Canada succeeded in signing several agreements with Latin American countries, such as Chile, Colombia and others. Moreover, new markets are open today for Canada. India represents special significance for the country. Canadian Business Magazine (2006) promotes a survey on the requirements of Canada-Chile free trade agreement (CCFTA). Since signing this document Canada’s export assets to Chile greatly increased. Thus, the review shows that Canadian export to Chile in 2005 amounted $411 million compared to $388 in 1995 (Campbell 2006, 1).

The growth of Canadian concernment in new markets and in trade agreements increased also due to signing agreements with Caribbean countries. This agreement is called CARICOM. The terms of the agreement made possible reciprocal exchange of goods by Canada in the Caribbean Community. It also opened a free way for Caribbean countries. The beneficial results were stated immediately since the adoption of the document.

Two-way merchandise trade has favoured CARICOM and has more than doubled over the last decade, from $1.0 billion in 1998 (with CARICOM exports to Canada worth $639 million and imports from Canada of $371 million) to $2.5 billion in 2008 (with CARICOM exports worth $1.6 billion and imports of $906 million) (CARICOM 2008, 1).

Moreover, the Prime Minister of Canada sees the budding perspectives in further mutual participation with Caribbean Community. The agreement also gave opportunities for both parties in providing services and other participation on the base of profit gains.

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Today Canada started negotiations with EU for Economic, Trade Agreement. This strategic anticipation of requirements convenient for both sides of the supposed agreement is under a strict eye of World Community. This document bears the title of comprehensive economic and trade agreement (CETA). Due to its adoption both economies will be able to provide almost €20 billion annually (HIS Canada News 2009). This goods and services trade would possibly increase after signing the agreement up to €70 billion annually (HIS Canada News 2009). In fact the Canada’s stopck into EU is rather high. EU is the fourth largest domain for Canadian investments in the international dimension (HIS Canada News 2009).

Boyer & Drache (1996) observed the situation in the international markets in their main dimensions and prior trends within countries. They evaluated the situation of current at the time market and its relation to Canada. In this respect the authors indicate that international trade agreements for the countries is the guarantee for major players that minor participants will definitely follow the trade rules. This assertion provides the effective and efficient background for the international trade and its legality between countries. In comparison with the above stated two studies Boyer & Drache (1996) also admit the negative impacts of the trade liberalization on Canada. Furthermore, the authors state personal concernment about Canadian methods of trade regulations in internal and external dimensions. It is so because Canada had been suffering from the negative consequences of this feature in trade after the destruction of “imperial” approaches in the world. In fact, this negative period lasted in Canada much longer than in other countries.

The authors discovered that for Canada the points of FTA with the US were prevalent. This concerned even the legislation of such agreement. It was placed above all other laws in the country’s international trade policy. Moreover, the Canadian government throughout the post-war period was apt to make politically and economically right decisions. Consensual framework for making agreements with such influential countries made possible the further integration of the country into the domain of the international trade agreements. Free trade agreements were profound for Canada, and they were stated as the supreme for the national economy. What is more, the research outlines that the method of so-called “unfettered market” was practically used by the initiative government of Canada.

The role of trade agreements for Canada in the contemporary stage of the country’s economic development is still shaped as the paramount. The study performed by Cooper & Rowlands (2006) evaluates minor and prior aspects of the Canadian approach in economic affairs among other nations. In this respect the role of trade agreements and their free character is specially emphasized in the research. The authors tend to admit that in contemporary post-industrial society the coloring of the market may change in some respect, but the trade principles remain the same.

The analysis of the previous studies can be compared with the contemporary ones in the urge of Canada for making FTA with the US firmer and more improved. The authors evaluate the actions of the government as rational and concerned with the national program for the economical growth. Thus, the issue of FTA with the United States provided by the Chretien’s government made positive impacts on the role of Canada in the continental and international relations. Trade and its main concepts for profitable and sufficient elaboration were then accomplished by the Martin’s government.

The study shows that in modern design of the Canadian trade the prospects on the economical integration with the US are thought of as the paramount. It also constitutes Canada-US defense relations, as the background for the political and economical stability between two countries. In this respect the role of trade agreements is rather high for Canada due to its direct approach toward the points of NAFTA. However, the authors admit that, notwithstanding the close relations with the US, the rest of the Canadian tenure is straightforwardly considered with the elaboration of the internationalist prospects in order to make some points on freedom of actions. Thus, bilateralism was apparent in trade relations of the country, but Canadian governments since signing the NAFTA still seeks for some new approaches in provision of international relationships with other world’s countries.

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Kerr & Gaisford (2008) collect the factual material as of the problem of the asymmetry in relations between Canada and the US. In this respect the research showed differences in terms of how each of the parties approaches toward personal role in reciprocal trade activities. The main argument of the authors regarding to the FTA is that such agreements were signed for the purpose to manage them, but not for genuinely free trade. The situation is drawn in terms of controversy in the supposed profits for countries. In this respect the ratio between the US and Canada can be presupposed equivocally. In other words, the authors note that “Us welfare would only be slightly higher at free trade than in a Nash equilibrium whereas Canada would gain more, especially relative to its small GDP and population” (Kerr & Gaisford 2008, 65).

This means that Canada has some opposite thinking over the trade agreements. Canadian economy was, as was mentioned by Boyer & Drache (1996), struggled for its position in the world’s international trade during the period of trade liberalization. Thereupon, Kerr & Gaisford (2008) describe the participation of the US in the international dimension and in it continental approaches toward smaller countries, as Canada and Mexico. All in all, the main ideas in the study promote further evaluation of the trade agreements in relation to European countries and Great Britain, in particular. Vested interests and national responsibility for the provision of constructive development of the relations with the US in their firm context are taken into account by the government of Canada.

Ruypers (2005) examines Canada’s internal flow of reforms in the implementation of the international activity of the country. In this case the author underlines the rationale in provision of work in top departments in the country. The thing is that the department of External Affairs was changed then in 1993 into the department of Foreign Affairs and International Trade. In the modern reality of the twenty-first century the department was divided into two ones in 2003: Foreign Affairs and International Trade. The author admits that such dissemination of responsibilities in external relations was really appropriate for better regulations in the international domain. Moreover, looking at the above stated studies, this one promotes the urge of the observers for improvements in Canada’s FTA with the US and other countries. It is due to the conservatism and bilateralism of the Canadian government, that the country does not provide harmful effects on its trade agreements. Hence, Canada values the initial points on agreements with closest allies. The author highlights straightforward attention of the federal government in the country on the current world tendencies and possible collapses. It is helpful for making sound ideas as of the proper shifts of trade centers. Furthermore, trade policy of the country prescribed the line of strategic actions, if the situation in trade sphere spontaneously falls in decline.

Human rights and democratic values are imposed into the national program for the internal and external relationships in Canada. This is why the author admits the readiness of Canada to fulfill the field of trade relations with closest partners and other countries as well. The major position of the country’s trade policy contemplates the determination of main values and principles in the international arena: “The role of International Trade Canada is to promote the country as a business leader and to negotiate trade agreements that will help Canadian businesses compete in the international marketplace” (Ruypers 2005, 298).

In fact, the situation with the Canadian trade policy is improved due to the constructive and rational approach of the government in the country toward the agreements in this field of activities. Looking at the modern evaluation of main perspectives for the country, it is vital to admit that bilateral partnership with the US is still strong for the external relationships in the country. The provision of free trade agreements with other countries of the continent is not desirable for Canada, if the relations between countries represent some doubts on the higher level of decision making. Paley (2009) observes in his article the decline of the Canada-Colombia relations due to instable situation in Colombia related to constant strikes of employees. Of course, suchlike difficulties would not promote the appropriate positive circle of trade relationships for Canada, in particular. It is known that at the moment Canada has a trilateral agreement for FTA pointed out in the NAFTA. It also signed such agreements with Chile, Costa Rica, and Israel (Paley 2009). The current urge of the country is to make more initiatives in the constantly changeable market. Aggregate demand and supply of Canada lead toward seeking for new decisions in the field of trade relations. In other words, guiding negotiations with probable partners is not easy to solve by mean of one meeting or summit. The talks about finding out the consensus between parties presuppose several rounds. Paley (2009) highlights 16 rounds of Canada-US negotiations.

The picture of the international relations between major countries seems to be closely related to a definite position of Canada. Huge experience in trade relations with elaborated mechanisms for regulations and control in the international marketplace is considered to be a “credit card” of the country. One of the main events in the international trade agreements is concerned with signing suchlike act with Colombia. However, the opinions of the observers in these rounds of talks are united in the idea that free trade relations are not for the well-being of majority (Paley 2009).

This is why current observation gives basis for assertions that Canada tends to make FTA with other countries just for managing of these agreements and provision of the economically and politically sufficient relations in this strategic side of the national interests. Trade is the basis for the economical growth. This is why Canada is accurate and careful as for the modern flow of the international activity of the country. In terms of the economical crisis it is vital for Canada to save the points of previously signed agreements. This is why the government of the country follows the prior trade policy implicated in making the economical recovery by means of finding out new markets in the world. Nonetheless, it does not hurt the economical variable in terms of the Canada-US relations.

Conclusion

The research provided in the paper showed the analysis of the role of trade agreements for Canada. In this respect it is necessary to admit that the national program for promotion of Canadian vision of the trade perspectives props up against concrete historical background. Previous studies showed the bilateral and then trilateral relations of Canada with the US and Mexico were signed under the NAFTA. On the whole the trade sustainability of Canada is presupposed with some similarities of the country’s government main approaches with the democratic prerequisites of the United States. The urge for the participation in international trade is emphasized for Canada. Thus, the role of trade agreements is detected as the main pragmatic prospect. The world is many-faceted in its shaping. Thus, as Aronsen (1997) points out even in terms of predominant significance of the US initiatives according to the Canada-US free trade agreements, Canada was able to seek for constructive and reliable dialogue.

The significance of the literature review is implied in the correctness of data and sequential character of the historical evaluation promoted in the research. This is why it would be convenient for an observer to make proper assumptions about the subject matter. Furthermore, the reliability of the studies shows the importance of the trade agreements for Canada. The fact that Canada values such agreements above all laws gives grounds for stating concernment of the government and business structures accordingly (Boyer & Drache, 1996). Canada has far-reaching perspectives as of the current state of national affairs. Moreover, country is rather successful in implementation of trade initiatives with other countries of the North and South America. The supremacy of trade agreements for Canada is enacted as the prior step for the national economy.

The research showed the relation of Canadian trade to the world economical grounds maintained in the US, Great Britain, and many of other players in the international market space. Hence, seeking for available larger market size, Canada approaches rationally toward consensual points of agreements possible or essential at the moment. The role of Canada is significant also for the US, as the main partner in the development of the North American relations. Canada is reliable for making deals because of the loyalty of the government toward provision of business relationships. Boyer & Drache (1996, 402) note that the uniqueness of Canadian prospects in FTA is commonly anticipated in the society: “Many of the ways which Canada has organized its economy are distinct and reflect the ways in which its people have had to deal with unique conditions.”

The recommendations for the research presuppose particular knowledge background as of the economic and political relationships maintained in the major countries of the world and Canada, in particular. Moreover, the research needs more implications of current observation. The thing is that the analysis of trade activity of Canada and the role of related agreements. All in all, the whole picture of the Canadian trade relations is emphasized due to the pragmatic Western design for having deals. Free trade agreements are described in the research, as the optimal and solely the best way for the improvements in trade area of the country.

Bibliography

Aronsen, Lawrence. 1997. American national security and economic relations with Canada, 1945-1954. Westport, CT: Greenwood Publishing Group.

Boyer, Robert and Drache, Daniel. 1996. States against markets: the limits of globalization. London: Routledge.

Campbell, Christina. “Rough trade: the Canada-Chile Free Trade Agreement.” Canadian Business magazine, 2006, Web.

CARICOM. 2008. “Benefits of a Canada-CARICOM Trade Agreement.” Web.

Cooper, Andrew F., and Rowlands, Dane. 2006. Canada Among Nations, 2006: Minorities And Priorities. Montreal: McGill-Queen’s Press – MQUP.

Hufbauer, Gary Clyde, and Schott, Jeffrey J. 1994. Western Hemisphere economic integration. Washington: Peterson Institute.

IHS Canada News. “Canada, EU Start Negotiations for Economic, Trade Agreement.” 2009, Web.

Kerr, William A., and Gaisford, James D. 2008. Handbook on International Trade Policy. Cheltenham: Edward Elgar Publishing.

Paley, Dawn. 2009. Deadly dealings surround Canada-Colombia Free Trade Agreement. This Magazine, Web. 

Ruypers, John. 2005. Canadian and World Politics. Toronto: Emond Montgomery Publication.

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