INTERNATIONAL TRADE LEGAL ISSUES
These agreements are about opening up new markets for Canadian businesses. The Canadian government has a commitment to creating the most desired and favorable conditions for businesses within Canada to compete internationally. These include two major agreements such as free trade agreements (FTAs) and also the foreign investment promotion and protection agreements (FIPAs) involving Canada and her trading partners for the creation of new business opportunities for the Canadian enterprises. In the case of FTAs, the agreement is in force between Canada and more than other fifteen countries that offers a competitive advantage ranging across various sectors. FIPA, on the other hand, is a bilateral agreement whose aim is to protect and promote foreign investment by the use of legally binding obligations and rights.
CANADA-LEBANON FOREIGN INVESTMENT PROMOTION AND PROTECTION AGREEMENT
This agreement is about protecting and promoting investments initiated, made or owned by investors of either of the contracting parties in the territories of the other contracting party and ensuring that such investments will be conducive for stimulating business initiatives and the development and growth of the economic cooperation between these two contacting parties.
The countries involved in this agreement are Canada and Lebanon, herein referred to as the ‘Contacting Parties’. The agreement was signed on June 19, 1999, between the Canadian government and the Government of the Lebanese Republic (www.treaty-accord.gc.ca).
The main contents of this agreement include protection and promotion of investments, investment establishments, treatment of the already established investments, performance requirements, compensation for incurred losses, expropriation, funds transfer, subrogation, taxation measures, dispute settlement mechanisms between the host contacting party, investors and among contracting parties and transparency.
Advantages
It offers the freedom of exporting unlimited amounts of products and services which create a more dynamic market and business climate. This implies that goods that are in excess within one state will have a total market in the other contracting party state as long as there is demand in that nation. The creation of free market enables consumers the freedom of purchase, accordance and use of preferred goods and services irrespective of the territory where they have been produced thus increasing the economic growth. The agreement provides for a free transfer of a production process, technology or proprietary knowledge to any person in any territory (Krueger, 2009). This element will lower government in aids to local industries. Foreign direct investments as investors flock the other territory to support local industry development by additional capital as well as boosting the domestic business. The unique nature of this agreement provides for compensations in the event of losses to investors emanating from national emergencies, armed conflicts or national disaster occurring on the contacting partner’s homeland (www.treaty-accord.gc.ca). In this regard, investors will be more willing to invest with that sense of security in their minds.
Disadvantages
This open trade agreement endangers the development of local industries. Foreign investors can import many products in a manner that dilutes the market for locally produced goods and services. With the inequality in technology, the process of production, machinery and human resources, the superior country stands to benefit over the inferior one as far as product production and distribution are concerned. This effect of inequality will lead to the rise of job outsourcing as foreign companies will be able to expand rapidly and recruit more works as a result of reduced tariffs on imports (Krueger, 2009). Low cost of importation will make it difficult for same Lebanon industries to compete, and as a result, they reduce their workforce. Again, there is the danger of theft of intellectual property since inferior nations lack protection for inventions, new processes, and patents while their existing laws do not strictly enforce them. Also, there is the possibility of crowding out the local industries since most emerging markets rely on farming but they would struggle to compete with the subsidized agribusiness being undertaken in developed nations.
Most influenced industries
Like any other general agreements, the industries and sectors that might be affected by the signing of this agreement include transportation, communications, information technology, Consumer products, Agrifood among others. Free trade enhances free movement of goods and services from one territory to the other. Canada’s chief exports to Lebanon include pharmaceutical products, motor vehicles, and aircraft. Lebanon’s top exports to Canada include preparations of fruits, vegetables, coffee, tea, and spices. It is through transportation that these products and services reach outside markets; hence, the transport sector will have to be influenced by this agreement. Few direct or indirect flights might be scheduled from one territory to the other in a manner deemed fit by the movement demands of the investors and even customers. After all Canadian institutions and companies are constantly present in Lebanon whether directly or through representatives or partnerships. Transport industry intimately depends on the communication industry. To coordinate investments and trade, investors will have to communicate continuously amongst themselves and with the customers. All these communication demands will have an influence on the existing communication industry which is primarily supported by the information technology. Increased demand for transport and communication services invites advancements in the information technology industry. All these interconnections work together to promote trade and investment between contracting parties.
Conclusions and Recommendations
Canada-Lebanon Foreign Investment Promotion and Protection Agreement provides an equal platform opportunities for investment growth to both countries though not in equal measure since Lebanon does not match Canada’s capacity regarding innovation, technology, and capital. Again, Lebanon has been affected by the constant crisis in Syria. I would recommend that Canada continues its educational, financial, technological and job creation support to Lebanon to maintain the existing win-win scenario that is presently evident as a result of this agreement.
CANADA-SOUTH AFRICA TRADE AND INVESTMENT COOPERATION AGREEMENT (TICA)
This agreement is about the realization of certain objectives such as enhancement of economic relations particularly in trading of goods and services and investment between these two nations. It also aims at strengthening the cooperation between these two states with the view of trade liberalization as per the principles stipulated by the World Trade Organization (WTO). The agreement involves the promotion of a favorable business environment and supplementary activities that encourage investment by private sector players while highlighting the importance and necessity of private sector investment and trade initiatives as being the means of promoting economic growth and source of prosperity. The countries involved n this agreements are Canada and the Republic of South Africa. This agreement was signed on March 14, 2012, by the governments of the above two countries (www.international.gc.ca).
The major contents of this agreement are trade and investment cooperation initiatives, the role and composition of the consultative group, obligation and rights of the consulting parties and the action plan.
Advantages
This agreement will enhance the expansion of business contacts through the encouragement of broader investment and trade links with the private sectors of the two nations. This, therefore, means both countries will have a wider market to sell their products as well as having the opportunity to receive a variety of products from the local markets from the other trading partner country. Improved expertise since global companies will have the expertise in local resource development particularly in mining and oil drilling including free training in aiding the local business support for trade promotion activities will enhance faster ways of introducing foreign goods and services into the hosting country. This trade agreement will increase investment flows by identifying and removing measures that have been an impediment to bilateral trade in the past. The agreement provides for the opportunity to develop and conduct training in trade-related sectors for which one party has more expertise than the other (www.international.gc.ca). It gives platforms for identifying the options and relevant actions for facilitating trade and improving market accessibility for goods and services. Technology transfer will be enhanced as trade corporation allows the local companies to have access to the latest technology from the foreign partner.
Disadvantages
Since both Canada and South Africa are significant manufacturers of mineral resources in the world, this agreement poses the danger of natural resource degradation through extensive engagement mining. As multi-nationals move in, emerging market states find their minerals, timber, and other natural resources depleted. The absence of import fees and tariffs will reduce tax revenue forcing smaller countries into finding other ways of replacing that revenue (Krueger, 2009). Again multinational firms move jobs to the emerging markets with inadequate labor protection mechanisms. As a result, children and women tend to be the subject substandard conditions with grueling industry jobs.
Most influenced industries
The industries that stand to be impacted by the signing of this agreement include communication, mining and natural resources, transport, education, engineering services and information technology. To realize efficient trade and investment, communication and movement of the private sector players will have to be equally valid. Therefore in order to access the available markets, lots of transportation activities will have to take place between these participants. Effective communication relies on the right information technology. Hence, the existing information technology will have to be upgraded to support sufficiently such activities. Education on market dynamics will be done due to the entrance of new products and participants. The nature of bilateral trade involves an exchange of resources that are plenty in our states to the state where they are limited. Thus, mining and natural resource exploration will be on the rise due to the increased market space. In the exploration process, engineering services will be affected in attempting to match the expanded demand.
Conclusions and Recommendations
With regards to the nature of their trading natural resource products, which is a natural setup for cooperation, both countries should further exploit the growing interest in increasing mining related and investment trade. Both sides have opportunities to exploit in the areas of mining technologies and equipment. Further research on beneficiation opportunities should be done as in the present time little trade expansion is taking place besides mining. Canada-South Africa Trade and Investment Cooperation Agreement provide Canada with a gateway to Africa in general. Canada can use such opportunity to exports its other products to the African continent, especially the Southern and Sub-Saharan Africa.
References
View Treaty - E101529. (n.d.). Retrieved February 15, 2016, from http://www.treaty-accord.gc.ca/text-texte.aspx?id=101529
Republic of South Africa Trade and Investment Cooperation Arrangement (TICA). (n.d.). Retrieved February 15, 2016, from http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/other-autre/south-africa.aspx?lang=eng
Krueger, A. O. (2009). Are preferential trading arrangements trade-liberalizing or protectionist?. The Journal of Economic Perspectives, 13(4), 105-124.
