Canada’s specific tradeagreements encompass Trades in Service Agreements (TISA). These arrangementscurrently involve several countries: “Australia, Canada, Chile, Chinese Taipei,Colombia, Costa Rica, the European Union, Hong Kong (China), Iceland, Israel,Japan, Liechtenstein, Mauritius, Mexico, New Zealand, Norway, Pakistan, Panama,Peru, South Korea, Switzerland, Turkey, and the United States” (Global AffairsCanada, 2017). This agreement precisely deals with “market access issues (e.g.limits on the number of service suppliers or transactions, discriminationagainst foreign service suppliers, etc.
) with many important trading partners”(Global Affairs Canada,2017). Similarly, free trade zones in Canada encompass broadmacroeconomic policies along with harmonizing programs that make Canada anideal free trading zone.Advantagesand Disadvantages (Trade Agreements) In general trade agreements bring major incentives:According to Heneghan (2015) new markets are opened as well as barriers such asimport tariffs, and quotas are virtually eliminated. Specifically, tradeagreements benefit the beverage industry by allowing countries in which thesecompanies operate the opportunity to challenge what they may view asillegitimate trade issues. Additionally,WM1 there is significantly more protection for intellectual property rights forcompanies such as Red Bull. In contrast, the drawbacks of trade agreementsbasically fall in the general drawbacks as any other industry. According toAmadeo (2011), these disadvantages include job outsourcing, natural deprivationof resources, theft of intellectual property rights, crowding out the domesticindustry, poor working conditions, and reduced tax revenue.
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Advantagesand Disadvantages of Free Trade Zones As defined by Unal (2017) free trade zones are” areaswithin which goods may be landed, handled, warehoused, manufactured orreconfigured, and re-exported as duty-exempt finished goods without theintervention of the customs authorities, import quotas, export subsidies, andprotective tariffs” (Unal,2017). The advantages associated with free tradezones quiet naturally are the duty-free exemptions given these products such asenergy drinks ship to these areas. Furthermore, these zones are labor intensivewhich is intended to attract employers that in turn will hire locals. With theemployment of these locals, the hope is that poverty and unemployment willdecrease. In contrast, free trade zones have some drawbacks: One significant oneis the loss revenue governments experience from not charging duties on thesegoods (Unal,2017). For example, if a large shipment of energy drinks is shippedinto a free trade zone in Canada.
The Canadian government will loss x amount ofdollars because of the exempt status of the product. Additionally, anotherdownside to these zones is sometimes products are smuggled into these areas totake advantage of the duty-free status (Unal,2017).Competitiveness(Beverage Industry) According to the World Year Book Canada is one of the topcompetitors in the world. For example, based on the 2017-yearbook Canada had astrong economic performance over the past years (See Chart Below).Chart Informationobtained from: IMD World Competitiveness Center. (2017).Canada Country Profile. Retrieved from http://file:///C:/Users/minor/Downloads/ca.
pdf.Canada’s foreign directinvestment is exceptional as can be seen in their ranking of number 9 accordingto the IMD World Competitiveness Center (2017). About the beverage industry in Canadaenergy drinks have soared despite health concerns (Kopun,2017). For example,the city council in Toronto decided to stop the sale of energy drinks topersons under the age of 18 because of the concern of the high sugar content.Consumers in Canada are opting for more sugar-free energy drinks. As stated by JimGoetz, president of the Canadian Beverage Association the energy drink industryis going through a major overhaul. Manufactures of energy drinks are changing theirprocesses to include more healthy ingredients such as Taurine.
This is an aminoacid that has been proven to increase concentration as well as physicalperformance. The leader in the energy drink industry as mentioned by Kopun(2017) is Red Bull.” The market leader in energy drinks is theprivately held Red Bull, based in Austria, selling more than 6 billion cansworldwide in 2016″ (Kopun,2017). Overall the beverage industry in Canada is abooming business. This can be seen in the innovations by market leaders such asRed Bull as well as their ranking of number 5 for food and beverage costs (IMDWorld Competitiveness Center, 2017).