The new U.S. Administration has laid out broad strokes of an economic plan consisting primarily of personal and corporate tax cuts, a large infrastructure plan, more inward-looking trade policies, and deregulation in the financial and energy sectors. If implemented, this plan could have large spillovers into Canada’s economy and public finances. Except possibly positive spillovers to the financial and energy sectors from deregulation and tax cuts, Canada could experience negative trade and tax spillovers that could reduce overall demand and growth potential, negatively impact the labor market, and decrease the tax base. Trade and tax spillovers would have significant impact as Canada is a small open economy reliant on trade with the U.S., its …show more content…
to maintain NAFTA. Benefits of doing so include reducing current Canada-U.S. trade policy uncertainty and sustaining existing trade benefits long term. Challenges involve potentially renegotiating key parts of NAFTA and harm from any pressured renegotiation that would set a precedent for future trade negotiations.
In addition to NAFTA, Canada should continue to diversify trading partnerships beyond the U.S. Diversification benefits include new trade opportunities and reduced risk from any single partnership. Potential drawbacks to gaining additional partners include increased political exposure and lengthy negotiations that would be more challenging than in the past due to a global socioeconomic context with increased protectionist sentiment.
To mitigate tax cut spillovers, Canada should act to maintain its competitive tax policy relative to the U.S. Competitive taxes are beneficial in attracting investment and skilled labor necessary for growth. They also play a role in keeping skilled workers in Canada and preventing a “brain drain” to the U.S. like the one seen in the 1990s attributed to U.S. growth, relatively lower U.S. taxes, and high Canada-U.S. mobility at the time. As any tax cuts must be balanced with fiscal stability, a potential challenge will be the need to broaden the tax base to support lower taxes which may necessitate significant immigration measures due to Canada’s low
The global economy has been recovering from the financial crisis which occurs in 2008, then has a weak growth for most developed countries over 2012 and 2013. But economic activity in Canada has expanded at a faster pace than most other major advanced countries in 2012; however, economic performance in Canada has been unsteady throughout 2013 (The Economic review, 2013). After the last quarter in 2010 GDP growth rate grows rapidly, the GDP grows slowly but steadily in 2012 which remains at around 3 percent. Real GDP growth rate in Canada grows slowly in the first quarter of 2013, but increased by 5 percent in the second quarter ,then remains the same level until the first quarter of 2014 (Statistics Canada, 2014). In 2014, the Canadian government take a series economic action plan as a guide for the economy development such as improving investment conditions, ...
The article goes over the affects this deal has on some local Canadian industries. For example, the author explained that this deal will possibly increase the amount of imported foreign car parts and maybe even dairy products, which could mean a better selection as well as lower prices for consumers but also hurt some workers who operate locally in these businesses. Currently the absence of foreign products in the Canadian dairy market means that there is less selection for a higher price, but this also means that local farming communities can have stable incomes and can be
In 2013, the European Union signed a trading pact with Canada in order both sides to increase their foreign market export and boost their economy sectors. This paper will examine the purpose of CETA and its impact on Canadian industry. The focus will be on food, drug, forestry, marine, and mining industries including water supplies in Canada.
Spicer, Keith. 1991. Citizen’s Forum on Canada’s Future: Report to the People and Government of
After three years of debate NAFTA was established in 1994. Fears concerning NAFTA included job creation, loss and transfer, wages and infrastructure. (Ganster/Lorey 188-189) However, with the implementation of NAFTA the economy grew. Ganster and Lorey reveal that bilateral trade increased by $211.4 per year from 1989 to 2004. Commerce grew by 20 percent in the first six months of 1994. There were advantages and disadvantages of NAFTA, nevertheless, NAFTA “intensified the integration of the two economies rather than distancing them.” (Ganster/Lorey 190)
The Canada-U.S. trade relationship is not static. Political and business strategies and practices change on both sides of the border, and events occur such as "mad cow disease" that are beyond almost everyone's control.
The North American Free Trade Agreement—NAFTA—was an important agreement signed between three countries—the U.S., Mexico and Canada. NAFTA played an important role between each of these countries’ relations with one another through imports and exports. Throughout the presidential elections throughout the years, NAFTA has been highly debated on whether or not it has helped benefit the economy of these countries or if it has caused a lot detrimental issues. NAFTA promised many benefits for these countries, but not all of their promises were carried through; many views across the political spectrum also have their indifferences about NAFTA.
Prior to NAFTA (Inc. April 2006), “… tariffs of thirty percent or higher on export goods to Mexico were common, as were long delays caused by paperwork…. NAFTA addressed this imbalance by phasing out tariffs over 15 years. Approximately 50 percent of the tariffs were abolished immediately when the agreement took effect, and the remaining tariffs were targeted for gradual elimination.” According to Kimberly Amadeo (2015), article 102 of the NAFTA agreement outlines its purposes which is to “Grant the signatories Most Favored Nation status, eliminate barriers to trade and facilitate the cross-border movement of goods and services, promote conditions of fair competition, increase investment opportunities, provide protection and enforcement of intellectual property rights, create procedures for the resolution of trade disputes, and establish a framework for further, trilateral, regional, and multilateral cooperation to expand the trade agreement’s benefits.”. This quotation, condenses the agreement by stating that the intentions of NAFTA which was an agreement created to ease trade on imports and exports, by eliminating tariff barriers, in order to encourage competition and venture opportunities. Although, free trade is supposed to bring wealth, strength, and prosperity it should also
...nguage, and religion all make up Canada’s human face, but also front how the cultural accommodation will continue with the risk of losing Canada’s main traditions. Faultlines again come into perspective within demographic issues, especially with newcomers/old-timers, aboriginal population expansions, and French/English language. The core/periphery model is also represented. The end of the chapter places a focus on Canada’s economic face as well, dealing with stresses inside the global economy as well as its strong dependency on the U.S markets (Bone, 169) especially with the stimulating global recession. Canada’s economic structure leans on the relative share of activity in the primary (natural resource extraction), secondary (raw material assembly), tertiary (sale/exchange of goods and services), and quaternary (decision-making) sectors of the economy (Bone, 166).
The goal of NAFTA was to systematically eliminate most tariff and non-tariff barriers to trade and investment between the countries. NAFTA has allowed U.S., Mexico, and Canada to import and export to other at a lower cost, which has increased the profit of goods and services annually. Because the increase in the trade marketplace, NAFTA reduces inflation, creates agreements on intern...
People outside of Canada are baffled at how Canada ended up in such a state of affairs. Canada as a country has a lot going for it. A high GNP, and high per capita income in international terms. It is ranked at the top of the...
Throughout the last three decades, increasing numbers of Asians have migrated to Canada from all over the Asian continent. Currently, 44% of the Vancouver area population is of Asian descent (Statistics Canada, 2001). Immigrants commonly occupy skilled job positions that the host nation is unable to fill with its own citizens, and thus they offer many advantages to their receiving country. In a nation with a declining birthrate, such as Canada, their contribution can play a major role on multiple levels. The immigrants themselves often enjoy a greater earning potential than they did in their native country, which can be advantageous for those who wish to send money back home to support their families.
The first source is demonstrating the effect of the NAFTA which stands for North American Free Trade Agreement. The NAFTA is a political agreement between Canada, USA and Mexico, and the purpose of this agreement is to improve trading relations by decreasing trade barriers, by removing tariffs. The first source shows an image of a political cartoon. In this image there is a man with a sad expression on his face in front of a US factory, with a sign on the building saying “Labor Day: This year’s picnic will be held in Mexico, where your job went”. What the source is demonstrating is one of the negative effects of the NAFTA, which is job loss for Americans. The source shows this through symbolism and labelling: The sad man represents American
It should be a great thing for the economies of both countries, but since the North American Free Trade Agreement was signed, American businesses almost took over the Canadian economy. When the American companies started to make more business in Canada, it brought more jobs and money to the country in the short-term. But as a long-term effect Canadians became even more depended on the U.S. as the American companies started dominating Canadian companies in Canada. Also, today Canadian manufacturers have little protection from the government when ch... ... middle of paper ... ...
Thomas, David M.. Canada and the United States: differences that count. Third ed. Toronto: Broadview Press, 2008.