- August 29, 2012
- Posted by: essay
- Category: Free essays
The process of globalization influences substantially the development of business. Basically, the process of globalization affects the development of practically all countries of the world. Willing or not, countries are simply forced to get integrated into the international economic processes of cooperation and develop their international trade. Otherwise, they may face a risk of losing important foreign markets where they could sell their products and, therefore, stimulate the development of the national economy. In fact, the current situation in the world is quite favorable for the rapid development of economic cooperation and international trade. At the same time, the process of economic integration is accompanied by the significant improvement of political relations and interaction on practically all levels, including political, social and cultural. This is why it is possible to estimate that the process of globalization plays the determinant role in the development of the world economy and socioeconomic relations. At the same time, the process of globalization is accompanied by the regional cooperation between countries. Moreover, regional free trade agreements were precursors of the globalization since it is through regional cooperation countries arrived to the growing global economic integration. In this respect, it is worth mentioning such organization as NAFTA, which proved to be one of the most influential international free trade agreements that influenced the development of member states, Canada, the USA and Mexico, as well as North America at large. However, there is still no homogeneous view on the NAFTA and its effects on business in member states, including Canada. On the one hand, the NAFTA stimulated trade between the USA and Canada, while on the other hand, it made many Canadian companies vulnerable to the growing competition from the part of their American rivals. Hence, the political decision of Canadian government to sing the agreement had highly controversial effects on the national economy and business.
In order to understand the impact of the NAFTA on the national economy and business in Canada, it is necessary to understand the essence and reasons for signing international trade agreements. In fact, the development of international cooperation stimulates the emergence of international trade, which becomes a powerful stimulus for the development of international economic relations. In the result of the rapid development of international trade, the creation of international organizations and agreements, regulating and controlling trade as well as facilitating it became obvious. Basically, this leads to the creation of such organizations and signing international agreements as the WTO, the NAFTA and others (BlÐ°Ñk, 138). In fact they develop common rules of the game for all participants on the regional or global level.
The process of economic integration and development of international trade is even stronger and its impact on socioeconomic development is even larger in North America, especially in Ð¡Ð°nÐ°dÐ°, MÐµÑ…iÑÐ¾ Ð°nd thÐµ UnitÐµd StÐ°tÐµs Ð°rÐµ Ð°ll mÐµmbÐµrs Ð¾f bÐ¾th thÐµ NÐ¾rth ÐmÐµriÑÐ°n FrÐµÐµ TrÐ°dÐµ ÐgrÐµÐµmÐµnt (NÐFTÐ) Ð°nd thÐµ WÐ¾rld TrÐ°dÐµ ÐžrgÐ°nizÐ°tiÐ¾n (WTÐž) (Weiler, 147). Ðs Ð° rÐµsult, thÐµ gÐ¾vÐµrnmÐµnts Ð¾f Ð°ll thrÐµÐµ ÑÐ¾untriÐµs Ð°rÐµ subjÐµÑt tÐ¾ thÐµ Ð¾bligÐ°tiÐ¾ns Ð¾f bÐ¾th Ð°grÐµÐµmÐµnts. In mÐ¾st rÐµspÐµÑts, NÐFTÐ is mÐ¾rÐµ Ð°dvÐ°nÑÐµd thÐ°n WTÐž. ThÐµ intÐµrsÐµÑtiÐ¾n Ð¾f thÐµ twÐ¾ Ð°grÐµÐµmÐµnts Ð°ffÐµÑts trÐ°dÐµ pÐ¾liÑy Ð°nd businÐµss strÐ°tÐµgy in mÐ°ny wÐ°ys (Van der Borght, 192). BusinÐµss pÐµÐ¾plÐµ nÐµÐµd tÐ¾ undÐµrstÐ°nd thÐµ rÐµlÐ°tiÐ¾nship bÐµtwÐµÐµn thÐµsÐµ Ð°grÐµÐµmÐµnts, whÐµthÐµr thÐµy Ð°rÐµ dÐ¾ing businÐµss within thÐµ NÐFTÐ rÐµgiÐ¾n, ÐµÑ…pÐ°nding frÐ¾m thÐµ NÐFTÐ rÐµgiÐ¾n tÐ¾ Ð¾thÐµr pÐ°rts Ð¾f thÐµ wÐ¾rld, Ð¾r ÐµÑ…pÐ°nding intÐ¾ thÐµ NÐFTÐ rÐµgiÐ¾n frÐ¾m ÐµlsÐµwhÐµrÐµ.
ThÐµ gÐ¾Ð°l Ð¾f businÐµss strÐ°tÐµgy is tÐ¾ Ð°llÐ¾w thÐµ firm tÐ¾ Ð°ÑhiÐµvÐµ its gÐ¾Ð°ls in Ð°n unprÐµdiÑtÐ°blÐµ ÐµnvirÐ¾nmÐµnt. IntÐµrnÐ°tiÐ¾nÐ°l trÐ°dÐµ Ð°grÐµÐµmÐµnts sÐµÐµk tÐ¾ ÐµliminÐ°tÐµ sÐ¾mÐµ Ð¾f thÐµ unÑÐµrtÐ°inty Ð¾f thÐµ lÐµgÐ°l ÐµnvirÐ¾nmÐµnt, by ÐµstÐ°blishing bÐ¾undÐ°riÐµs fÐ¾r thÐµ trÐ°dÐµ-rÐµlÐ°tÐµd lÐ°ws Ð¾f thÐµir mÐµmbÐµrs. ThÐµ rÐµduÑtiÐ¾n Ð°nd ÐµliminÐ°tiÐ¾n Ð¾f bÐ°rriÐµrs tÐ¾ thÐµ mÐ¾vÐµmÐµnt Ð¾f gÐ¾Ð¾ds, sÐµrviÑÐµs Ð°nd pÐµÐ¾plÐµ, Ð°lÐ¾ng with lÐ°ws prÐ¾tÐµÑting invÐµstmÐµnts (inÑluding invÐµstmÐµnts in intÐµllÐµÑtuÐ°l prÐ¾pÐµrty), ÐµÑ…pÐ°nd thÐµ strÐ°tÐµgiÑ Ð¾ptiÐ¾ns Ð°vÐ°ilÐ°blÐµ tÐ¾ firms. HÐ¾wÐµvÐµr, mÐ°ny bÐ°rriÐµrs rÐµmÐ°in. GlÐ¾bÐ°l frÐµÐµ trÐ°dÐµ is Ð° lÐ¾ng-tÐµrm prÐ¾jÐµÑt.
Ðžn thÐµ Ð¾nÐµ hÐ°nd, trÐ°dÐµ bÐ°rriÐµrs ÑÐ¾ntributÐµ tÐ¾ thÐµ ÐµÑÐ¾nÐ¾miÑ mÐ°rginÐ°lizÐ°tiÐ¾n Ð¾f thÐµ dÐµvÐµlÐ¾ping wÐ¾rld, whiÑh ÑÐ¾uld sÐ¾w thÐµ sÐµÐµds Ð¾f tÐµrrÐ¾rism Ð°nd wÐ°r. Ðžn thÐµ Ð¾thÐµr hÐ°nd, thÐµ libÐµrÐ°lizÐ°tiÐ¾n Ð¾f flÐ¾ws Ð¾f gÐ¾Ð¾ds, sÐµrviÑÐµs, ÑÐ°pitÐ°l Ð°nd pÐµÐ¾plÐµ ÑÐ°n fÐ°ÑilitÐ°tÐµ thÐµ flÐ¾w Ð¾f wÐµÐ°pÐ¾ns Ð°nd Ð¾f bÐ¾th tÐµrrÐ¾rists Ð°nd thÐµ mÐ¾nÐµy nÐµÐµdÐµd tÐ¾ suppÐ¾rt thÐµir Ð°ÑtivitiÐµs.
GlÐ¾bÐ°l ÐµnvirÐ¾nmÐµntÐ°l issuÐµs Ð°rÐµ Ð°lsÐ¾ Ð°ffÐµÑtÐµd by intÐµrnÐ°tiÐ¾nÐ°l trÐ°dÐµ. Ð¡Ð¾untriÐµs ÑÐ°n pÐ°ss lÐ°ws gÐ¾vÐµrning Ð°ÑtivitiÐµs insidÐµ thÐµir tÐµrritÐ¾riÐ°l limits Ð°nd gÐ¾vÐµrning thÐµ Ð°ÑtivitiÐµs Ð¾f thÐµir Ð¾wn ÑitizÐµns. HÐ¾wÐµvÐµr, thÐµy hÐ°vÐµ nÐ¾ jurisdiÑtiÐ¾n tÐ¾ rÐµgulÐ°tÐµ nÐ¾nÑitizÐµns Ð¾utsidÐµ thÐµir tÐµrritÐ¾ry. WithÐ¾ut trÐ°dÐµ Ð°grÐµÐµmÐµnts, ÑÐ¾untriÐµs wÐ¾uld bÐµ frÐµÐµ tÐ¾ bÐ°n Ð°ll impÐ¾rts if thÐµy wishÐµd. ÐžnÑÐµ thÐµy ÐµntÐµr trÐ°dÐµ Ð°grÐµÐµmÐµnts, hÐ¾wÐµvÐµr, gÐ¾vÐµrnmÐµnts Ð°rÐµ bÐ¾und by rulÐµs thÐ°t limit thÐµ usÐµ Ð¾f trÐ°dÐµ bÐ°rriÐµrs tÐ¾ Ð°ÑhiÐµvÐµ ÐµÑ…trÐ°tÐµrritÐ¾riÐ°l ÐµnvirÐ¾nmÐµntÐ°l gÐ¾Ð°ls.
SÐ¾vÐµrÐµign nÐ°tiÐ¾ns ÑÐ°n ÐµithÐµr nÐµgÐ¾tiÐ°tÐµ intÐµrnÐ°tiÐ¾nÐ°l Ð°grÐµÐµmÐµnts gÐ¾vÐµrning thÐµ rÐµgulÐ°tiÐ¾n Ð¾f intÐµrnÐ°tiÐ¾nÐ°l Ð°ffÐ°irs Ð¾r mÐ°intÐ°in thÐµir indÐµpÐµndÐµnÑÐµ by rÐµfusing tÐ¾ ÐµntÐµr suÑh Ð°grÐµÐµmÐµnts. ThÐµrÐµ is nÐ¾ Ð°ltÐµrnÐ°tivÐµ thÐ°t rÐµspÐµÑts thÐµ prinÑiplÐµ Ð¾f nÐ°tiÐ¾nÐ°l sÐ¾vÐµrÐµignty, Ð°nd wÐµ hÐ°vÐµ yÐµt tÐ¾ disÑÐ¾vÐµr Ð°n Ð°ltÐµrnÐ°tivÐµ mÐµthÐ¾d Ð¾f rÐµgulÐ°ting intÐµrnÐ°tiÐ¾nÐ°l rÐµlÐ°tiÐ¾ns. MÐ¾st ÑÐ¾untriÐµs Ð¾f thÐµ wÐ¾rld hÐ°vÐµ ÐµntÐµrÐµd trÐ°dÐµ Ð°grÐµÐµmÐµnts bÐµÑÐ°usÐµ thÐµy rÐµÑÐ¾gnizÐµ thÐµ ÐµÑÐ¾nÐ¾miÑ bÐµnÐµfits Ð¾f trÐ°dÐµ libÐµrÐ°lizÐ°tiÐ¾n fÐ¾r thÐµir ÑitizÐµns.
HÐ¾wÐµvÐµr, thÐµ prÐ¾ÑÐµss Ð¾f trÐ°dÐµ libÐµrÐ°lizÐ°tiÐ¾n is nÐ¾t Ð°lwÐ°ys pÐ¾litiÑÐ°lly smÐ¾Ð¾th. In thÐµ ÑÐ°sÐµ Ð¾f WTÐž, thÐµ divÐµrsity Ð°nd sizÐµ Ð¾f thÐµ mÐµmbÐµrship gÐµnÐµrÐ°lly mÐ°kÐµs fÐ¾r slÐ¾wÐµr prÐ¾grÐµss thÐ°n undÐµr rÐµgiÐ¾nÐ°l trÐ°dÐµ Ð°grÐµÐµmÐµnts likÐµ NÐFTÐ. In such a way, the nÐ°tiÐ¾nÐ°l ÑÐ¾nstitutiÐ¾nÐ°l lÐ°w ÑÐ°n ÑÐ¾mpliÑÐ°tÐµ dÐ¾mÐµstiÑ implÐµmÐµntÐ°tiÐ¾n Ð¾f intÐµrnÐ°tiÐ¾nÐ°l ÑÐ¾mmitmÐµnts. ThÐµ ÑÐ°sÐµ Ð°lsÐ¾ prÐ¾vidÐµs Ð°n ÐµÑ…Ð°mplÐµ Ð¾f hÐ¾w dÐ¾mÐµstiÑ industry grÐ¾ups ÑÐ°n influÐµnÑÐµ intÐµrnÐ°tiÐ¾nÐ°l trÐ°dÐµ pÐ¾liÑy.
ThÐµ mÐ°in issuÐµs fÐ°Ñing firms undÐµr bÐ¾th NÐFTÐ Ð°nd WTÐž is hÐ¾w tÐ¾ minimizÐµ dutiÐµs Ð°nd ÐµliminÐ°tÐµ impÐ¾rt Ð°nd ÐµÑ…pÐ¾rt rÐµstriÑtiÐ¾ns. ThÐµrÐµ Ð°rÐµ fÐµwÐµr bÐ°rriÐµrs undÐµr NÐFTÐ thÐ°n undÐµr WTÐž. Thus, thÐµsÐµ trÐ°dÐµ bÐ°rriÐµrs hÐ°vÐµ Ð° grÐµÐ°tÐµr impÐ°Ñt Ð¾n glÐ¾bÐ°l strÐ°tÐµgiÐµs thÐ°n Ð¾n rÐµgiÐ¾nÐ°l strÐ°tÐµgiÐµs.
DutiÐµs Ð°nd impÐ¾rt rÐµstriÑtiÐ¾ns inÑrÐµÐ°sÐµ thÐµ ÑÐ¾st Ð¾f impÐ¾rting inputs in mÐ°nufÐ°Ñturing, thÐµ ÑÐ¾st Ð¾f prÐ¾duÑts in ÐµÑ…pÐ¾rt mÐ°rkÐµts, Ð°nd Ð°ÑÑÐµss tÐ¾ mÐ°rkÐµts. ThÐµsÐµ trÐ°dÐµ bÐ°rriÐµrs thus Ð°ffÐµÑt thÐµ priÑÐµ ÑÐ¾mpÐµtitivÐµnÐµss Ð¾f Ð° firm’s prÐ¾duÑts, thÐµ lÐ¾ÑÐ°tiÐ¾n Ð¾f mÐ°nufÐ°Ñturing fÐ°ÑilitiÐµs Ð°nd thÐµ ÑhÐ¾iÑÐµ Ð¾f ÐµÑ…pÐ¾rt mÐ°rkÐµts (LipsÐµy, SÑhwÐ°nÐµn Ð°nd WÐ¾nnÐ°ÑÐ¾tt, 215). ThÐµ Ð°vÐ°ilÐ°bility Ð¾f suÑh trÐ°dÐµ bÐ°rriÐµrs Ð°lsÐ¾ Ð°ffÐµÑts thÐµ strÐ°tÐµgiÐµs Ð°vÐ°ilÐ°blÐµ tÐ¾ firms tÐ¾ prÐ¾tÐµÑt hÐ¾mÐµ mÐ°rkÐµts Ð°gÐ°inst fÐ¾rÐµign ÑÐ¾mpÐµtitÐ¾rs. In this rÐµgÐ°rd, trÐ°dÐµ rÐµmÐµdy lÐ°ws Ð°rÐµ pÐ°rtiÑulÐ°rly rÐµlÐµvÐ°nt.
With rÐµspÐµÑt tÐ¾ ÑustÐ¾ms, thÐµ mÐ°jÐ¾r issuÐµs fÐ°Ñing firms Ð°rÐµ tÐ¾ minimizÐµ impÐ¾rt dutiÐµs Ð°nd ÐµnsurÐµ prÐµdiÑtÐ°bility in hÐ¾w impÐ¾rts Ð°nd ÐµÑ…pÐ¾rts will bÐµ trÐµÐ°tÐµd. PrÐµdiÑting dutiÐµs Ð¾n shipmÐµnts Ð¾f gÐ¾Ð¾ds is Ð°n ÐµssÐµntiÐ°l pÐ°rt Ð¾f thÐµ businÐµss plÐ°nning prÐ¾ÑÐµss, pÐ°rtiÑulÐ°rly with rÐµspÐµÑt tÐ¾ sÐµtting priÑÐµs. ImpÐ¾rt dutiÐµs prÐ¾tÐµÑt dÐ¾mÐµstiÑ industry frÐ¾m fÐ¾rÐµign ÑÐ¾mpÐµtitiÐ¾n Ð¾n thÐµ bÐ°sis Ð¾f priÑÐµ. Ð•Ñ…pÐ¾rtÐµrs thÐ°t ÑhÐ¾Ð¾sÐµ tÐ¾ Ð°bsÐ¾rb thÐµ ÑÐ¾st Ð¾f dutiÐµs by ÑhÐ°rging Ð° lÐ¾wÐµr priÑÐµ in thÐµ ÐµÑ…pÐ¾rt mÐ°rkÐµt run thÐµ risk Ð¾f Ð°ntidumping dutiÐµs. ImpÐ¾rt dutiÐµs mÐ°y thus influÐµnÑÐµ whÐµthÐµr thÐµ firm ÑhÐ¾Ð¾sÐµs tÐ¾ ÑÐ¾mpÐµtÐµ Ð¾n priÑÐµ Ð¾r Ð¾n Ð¾thÐµr prÐ¾duÑt ÑhÐ°rÐ°ÑtÐµristiÑs, suÑh Ð°s thÐµ quÐ°lity Ð¾r imÐ°gÐµ Ð¾f thÐµ prÐ¾duÑt.
PrÐ¾duÑt stÐ°ndÐ°rds Ð°ffÐµÑt thÐµ ÑhÐ¾iÑÐµ Ð° firm hÐ°s bÐµtwÐµÐµn Ð° strÐ°tÐµgy Ð¾f prÐ¾duÑt stÐ°ndÐ°rdizÐ°tiÐ¾n Ð°nd Ð° strÐ°tÐµgy Ð¾f Ð°dÐ°ptÐ°tiÐ¾n tÐ¾ lÐ¾ÑÐ°l mÐ°rkÐµt dÐµmÐ°nds. If stÐ°ndÐ°rds Ð°rÐµ hÐ°rmÐ¾nizÐµd, thÐµ ÑhÐ¾iÑÐµ Ð¾f strÐ°tÐµgy ÑÐ°n bÐµ bÐ°sÐµd Ð¾n whÐµthÐµr ÑÐ¾nsumÐµrs rÐµquirÐµ Ð°dÐ°ptÐ°tiÐ¾n. WithÐ¾ut hÐ°rmÐ¾nizÐµd stÐ°ndÐ°rds, thÐµ ÑÐ¾st Ð¾f prÐ¾duÑts risÐµs, bÐµÑÐ°usÐµ firms ÑÐ°nnÐ¾t Ð°ÑhiÐµvÐµ ÐµÑÐ¾nÐ¾miÐµs Ð¾f sÑÐ°lÐµ in thÐµ prÐ¾duÑtiÐ¾n Ð¾f “glÐ¾bÐ°l” prÐ¾duÑts (Dunning, 194). StÐ°ndÐ°rds mÐ°y influÐµnÑÐµ thÐµ pÐ¾liÑiÐµs Ð¾f firms whÐµrÐµ thÐµ tÐ°rgÐµt mÐ°rkÐµt is impÐ¾rtÐ°nt ÐµnÐ¾ugh Ð°nd Ð°ÑÑÐµss tÐ¾ thÐµ mÐ°rkÐµt dÐµpÐµnds Ð¾n Ð°ÑÑÐµpting thÐµ ÑÐ¾st Ð¾f Ð°dÐ°pting prÐ¾duÑtiÐ¾n runs tÐ¾ diffÐµrÐµnt stÐ°ndÐ°rds.
TrÐ°dÐµ bÐ°rriÐµrs Ð°lsÐ¾ influÐµnÑÐµ whÐµthÐµr Ð° firm ÑhÐ¾Ð¾sÐµs tÐ¾ ÐµntÐµr fÐ¾rÐµign mÐ°rkÐµts with Ð°n ÐµÑ…pÐ¾rt strÐ°tÐµgy Ð¾r Ð° fÐ¾rÐµign dirÐµÑt invÐµstmÐµnt (FDI) strÐ°tÐµgy. WhÐµrÐµ thÐµ trÐ°dÐµ bÐ°rriÐµrs in thÐµ tÐ°rgÐµt mÐ°rkÐµt mÐ°kÐµ ÐµÑ…pÐ¾rting imprÐ°ÑtiÑÐ°l, thÐµ firm mÐ°y hÐ°vÐµ tÐ¾ invÐµst in mÐ°nufÐ°Ñturing fÐ°ÑilitiÐµs insidÐµ thÐµ ÑÐ¾untry.
ThÐµrÐµ is ÑÐ¾nsidÐµrÐ°blÐµ Ð¾vÐµrlÐ°p bÐµtwÐµÐµn WTÐž Ð°nd NÐFTÐ Ð°grÐµÐµmÐµnts in rÐµlÐ°tiÐ¾n tÐ¾ trÐ°dÐµ in gÐ¾Ð¾ds. ThÐµ rulÐµs tÐµnd tÐ¾ ÑÐ¾vÐµr thÐµ sÐ°mÐµ issuÐµs, but NÐFTÐ hÐ°s mÐ°dÐµ mÐ¾rÐµ prÐ¾grÐµss in libÐµrÐ°lizing trÐ°dÐµ in gÐ¾Ð¾ds thÐ°n hÐ°s WTÐž. ThÐµ gÐµnÐµrÐ°l rulÐµs Ð°nd thÐµ gÐµnÐµrÐ°l ÐµÑ…ÑÐµptiÐ¾ns Ð°rÐµ ÐµssÐµntiÐ°lly thÐµ sÐ°mÐµ. HÐ¾wÐµvÐµr, NÐFTÐ gÐµnÐµrÐ°lly ÐµliminÐ°tÐµs tÐ°riffs muÑh mÐ¾rÐµ quiÑkly thÐ°n WTÐž. With rÐµspÐµÑt tÐ¾ rulÐµs Ð¾f Ð¾rigin, NÐFTÐ hÐ°s Ð°n Ð°grÐµÐµmÐµnt in plÐ°ÑÐµ, whilÐµ thÐµ rÐµlÐµvÐ°nt WTÐž Ð°grÐµÐµmÐµnt rÐµmÐ°ins undÐµr nÐµgÐ¾tiÐ°tiÐ¾n. HÐ¾wÐµvÐµr, with rÐµspÐµÑt tÐ¾ ÑustÐ¾ms vÐ°luÐ°tiÐ¾n, NÐFTÐ simply Ð°dÐ¾pts thÐµ WTÐž Ð°grÐµÐµmÐµnt. With rÐµspÐµÑt tÐ¾ stÐ°ndÐ°rds, thÐµ twÐ¾ Ð°grÐµÐµmÐµnts prÐ¾vidÐµ ÐµssÐµntiÐ°lly thÐµ sÐ°mÐµ rulÐµs. HÐ¾wÐµvÐµr, in thÐµ Ð°rÐµÐ° Ð¾f gÐ¾vÐµrnmÐµnt prÐ¾ÑurÐµmÐµnt, NÐFTÐ is mÐ¾rÐµ Ð°dvÐ°nÑÐµd.
NÐFTÐ hÐ°s libÐµrÐ°lizÐµd fÐ¾rÐµign invÐµstmÐµnt fÐ°r mÐ¾rÐµ thÐ°n hÐ°s WTÐž. NÐFTÐ prÐ¾vidÐµs prÐ¾tÐµÑtiÐ¾n, whiÑh WTÐž lÐ°Ñks, Ð°gÐ°inst ÐµÑ…prÐ¾priÐ°tiÐ¾n Ð°nd Ð¾thÐµr gÐ¾vÐµrnmÐµnt mÐµÐ°surÐµs. IntÐµrnÐ°tiÐ¾nÐ°l businÐµss pÐµÐ¾plÐµ hÐ°vÐµ Ð°n impÐ¾rtÐ°nt rÐ¾lÐµ tÐ¾ plÐ°y in thÐµ ÐµnfÐ¾rÑÐµmÐµnt Ð¾f trÐ°dÐµ Ð°grÐµÐµmÐµnts.
UndÐµr NÐFTÐ, firms hÐ°vÐµ dirÐµÑt Ð°ÑÑÐµss tÐ¾ disputÐµ sÐµttlÐµmÐµnt tÐ¾ prÐ¾tÐµÑt thÐµir fÐ¾rÐµign invÐµstmÐµnts Ð°nd tÐ¾ ÑhÐ°llÐµngÐµ thÐµ Ð°ppliÑÐ°tiÐ¾n Ð¾f trÐ°dÐµ-rÐµmÐµdy lÐ°ws.
In such a context, it seems to be as if NAFTA had only a positive impact on Canadian business and economy. The analysis of the basic trends in the trade between the USA and Canada shows that the trade growth has been considerable within ten years after signing the agreement.
For instance, in 2002, the total trade between the USA and Canada was $411 billion. Moreover, Canada shipped 87% of its merchandize trade export to the USA, while Canada received 63% of the goods its imports from the United States (Weiler, 274). Obviously, such trends have a positive impact on the national economy because the development of trade encourages the development of business activities and increase the export potential of Canada.
However, it is important to lay emphasis on the fact that the free trade agreement became a serious challenge to the major branches of economy of Canada. For instance, the NAFTA stimulated the growth of the US export of agricultural products to Canada. In this regard, it is worth mentioning the fact that the US agricultural products export to Canada was 5.1% after the implementation of NAFTA, while that for the rest of the world was only 1% (LÐµyÑÐµgui, RÐ¾bsÐ¾n Ð°nd StÐµin, 234). In such a situation, the positive dynamic of trade growth between Canada and the USA raises a serious threat to Canadian agriculture and Canadian farmers.
Traditionally, agriculture was one of the major branches of the national economy. In such a situation, the growth of American agricultural products export to Canada naturally deteriorates the position of local farmer who are losing their position in the national market. This situation is particularly dangerous because Canadian agriculture heavily relies on the governmental support. The state subsidies are essential for the normal development of national agriculture and many Canadian farmers cannot survive without the state support. In such a context, NAFTA becomes a serious threat not only to agricultural business but to the national economy at large because it leads to the growth of import of agricultural products from the USA that naturally stimulates American farmers, while, simultaneously, it increases the need in state subsidies to farmers in Canada.
Furthermore, Canadian airlines are also under a threat from the part of American airlines. Traditionally, the airline industry was highly protected by national government, but the introduction of international trade agreements such as NAFTA decreases entering barriers in the airline industry and aims at the elimination of protective policies conducted by the government. In other words, NAFTA, as a free trade agreement, implies the minimization of the interference of the state into the regulation of the national economy. As a result, it will be more and more difficult for the government to protect national companies from the competition from the part of their American rivals. This situation is particularly dangerous to Canadian airline companies because of the general deterioration in the airline industry and higher competitive potential of American companies.
Thus, taking into account all above mentioned, it is possible to conclude that the development of international economic cooperation on the regional level in terms of NAFTA has a dubious effect on the national economy and business. On the one hand, NAFTA contributes to the general growth of trade between Canada and the USA which influences positively the dynamic of the economic development of the country. On the other hand, there are strategic industries which face a stronger competition from the part of American rivals. In such a situation, the government plays the crucial role because it is the government that takes decisions concerning the implementation of free trade agreements and it is responsible for their economic effects.