Benefits And Impacts Of Canola Oil Trade Agreements Between Americas And The Other Nations
This report is based on planning to expand the business of Canola products to the other parts of the Americas. It comprises of summary about few trade agreements and which will suitable for expanding our business.
Canada-Costa Rica Free Trade Agreement (CCRFTA)
The Minister of International Trade of Canada and Costa Rica signed an agreement for free trading on April 23rd, 2001 at Ottawa. The objective of this agreement was to create free trade area by removing barricade of custom duty, create economic development opportunities (Canada-Costa Rica Free Trade Agreement Implementation Act, 2019, p.3).
In 2017, total trade of commodity between these two nations was 675 million dollars out of which 159 million dollars was exported by Canada and Costa Rica exported of 516 million dollars goods. The main commodities getting exported to Costa Rica are wheat, machinery and vegetables (Embassy of Canada to Costa Rica,2018, p.7).
Asia Pacific Economic Cooperation (APEC)
Asia Pacific Economic Cooperation (APEC) was created in 1989 by 12 countries and Canada was one of the founding members of this agreement but later many other countries joined APEC and currently there are 21 countries which are the member of APEC. The objective of APEC is to raise the standard of living and literacy level through tenable monetary development of the Asia Pacific nations (APEC, 2018, p.1)
Canada’s major export service and commodity trading partners among APEC members are the United States, China, Japan, Mexico & Hong Kong. The things which have major share in export are crude oil, motor vehicles & machinery & equipment and in services its travel services. The total amount of commodity export by Canada to APEC members in 2014 was $460.2 billion and import was $410.5 billion with trade surplus of $49.7 billion whereas in Service export Canada’s total trade amount is $145.3 billion I which Canada trade deficit is $18 billion. (Pascal Tremblay, 2015, p.8)
North America Free Trade Agreement (NAFTA)
North America Free Trade agreement (NAFTA) created the world’s huge free trade zone came into effect in 1994. It was signed between the United States, Mexico and Canada. The objective behind this agreement was to reduce or end the custom duty and increase foreign investments for making these nations more competitive globally (NAFTANOW,2012, p.1).
Reasons for focusing on NAFTA
Since the agreement came into existence the trade of the canola products has been increased. Moreover, even in upcoming agreement i.e. USMCA there will be no tariff on canola additionally they are ending the duty on margarine (canola processed product) too (CCC, 2017, p.2).
Controversial issues in NAFTA
Issues which faced in the agreement are
- Foremost issue of Automobile industry in which US demands for the loss of the manufacturing jobs (Alexander Panetta, 2018, p.1).
- Another issue of pharmaceutical industry in which US to disclose the pricing method of medicines by Canada (Alexander Panetta, 2018, p.1).
- Third issue US has with Canada is with dairy products to reduce the import of the products (Alexander Panetta, 2018, p.1).
Potentially benefited & harmed
NAFTA had a mixed impact on three of these nations. It increased the GDP of all these economies. It also created new jobs likewise in export, border service, retail etc. with the implementation of this agreement many tariffs/duties were ended due to which price also decreased. On the other side, it also harmed few ones like in US, employees around 700000 lost their job as many manufacturing units moved to Mexico due to low labor cost. Whereas in Mexico many farmers and small entrepreneurs got dislocated due to subsidized farm products (Kimberly Amadeo, 2018, p.3)
Impact of issues on expanding the business to the United States
As per the press release on the United State-Mexico-Canada Agreement (USMCA), the president of Canadian Canola Growers Association (CCGA) Jack Froese, said in his speech that “We’re pleased that the work of our Canadian trade negotiators has resulted in an agreement in principle that keeps our three integrated economies strong and positioned as leaders in the global marketplace” (CCGA Release, 2018, p.2). So as per my opinion this will be the right decision to expand the business of canola products as issues of NAFTA will not affect our business or our industry. Moreover, trade of canola products has been doubled in last decade.
It might be shocking to know the ranking of Canola oil. Despite the fact that it used to be the 6th largest oil, the growth in vegetable oil utilization has made it to the second position now. It is projected that by 2025 the manufacturing of Canola products is to increase by 40% (Hina Khan, 2017, p.2). Apart from this, the United states is the world’s second largest importer of Canadian Canola products. Canada exports its 65% of canola products to it. In 2017, Canada exported 5.9million tons of canola products to US of approx. $3.7 billion (Canola Council of Canada,2017, p.1).
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