Canada’s specific trade
agreements encompass Trades in Service Agreements (TISA). These arrangements
currently 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 Affairs
Canada, 2017). This agreement precisely deals with “market access issues (e.g.
limits on the number of service suppliers or transactions, discrimination
against foreign service suppliers, etc.) with many important trading partners”
(Global Affairs Canada,2017). Similarly, free trade zones in Canada encompass broad
macroeconomic policies along with harmonizing programs that make Canada an
ideal free trading zone.
and Disadvantages (Trade Agreements)
In general trade agreements bring major incentives:
According to Heneghan (2015) new markets are opened as well as barriers such as
import tariffs, and quotas are virtually eliminated. Specifically, trade
agreements benefit the beverage industry by allowing countries in which these
companies operate the opportunity to challenge what they may view as
illegitimate trade issues. Additionally,WM1
there is significantly more protection for intellectual property rights for
companies such as Red Bull. In contrast, the drawbacks of trade agreements
basically fall in the general drawbacks as any other industry. According to
Amadeo (2011), these disadvantages include job outsourcing, natural deprivation
of resources, theft of intellectual property rights, crowding out the domestic
industry, poor working conditions, and reduced tax revenue.
and Disadvantages of Free Trade Zones
As defined by Unal (2017) free trade zones are” areas
within which goods may be landed, handled, warehoused, manufactured or
reconfigured, and re-exported as duty-exempt finished goods without the
intervention of the customs authorities, import quotas, export subsidies, and
protective tariffs” (Unal,2017). The advantages associated with free trade
zones quiet naturally are the duty-free exemptions given these products such as
energy drinks ship to these areas. Furthermore, these zones are labor intensive
which is intended to attract employers that in turn will hire locals. With the
employment of these locals, the hope is that poverty and unemployment will
decrease. In contrast, free trade zones have some drawbacks: One significant one
is the loss revenue governments experience from not charging duties on these
goods (Unal,2017). For example, if a large shipment of energy drinks is shipped
into a free trade zone in Canada. The Canadian government will loss x amount of
dollars because of the exempt status of the product. Additionally, another
downside to these zones is sometimes products are smuggled into these areas to
take advantage of the duty-free status (Unal,2017).
According to the World Year Book Canada is one of the top
competitors in the world. For example, based on the 2017-yearbook Canada had a
strong economic performance over the past years (See Chart Below).
obtained from: IMD World Competitiveness Center. (2017).
Canada Country Profile. Retrieved from http://file:///C:/Users/minor/Downloads/ca.pdf.
Canada’s foreign direct
investment is exceptional as can be seen in their ranking of number 9 according
to the IMD World Competitiveness Center (2017). About the beverage industry in Canada
energy drinks have soared despite health concerns (Kopun,2017). For example,
the city council in Toronto decided to stop the sale of energy drinks to
persons 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 Jim
Goetz, president of the Canadian Beverage Association the energy drink industry
is going through a major overhaul. Manufactures of energy drinks are changing their
processes to include more healthy ingredients such as Taurine. This is an amino
acid that has been proven to increase concentration as well as physical
performance. The leader in the energy drink industry as mentioned by Kopun
(2017) is Red Bull.” The market leader in energy drinks is the
privately held Red Bull, based in Austria, selling more than 6 billion cans
worldwide in 2016″ (Kopun,2017). Overall the beverage industry in Canada is a
booming business. This can be seen in the innovations by market leaders such as
Red Bull as well as their ranking of number 5 for food and beverage costs (IMD
World Competitiveness Center, 2017).