Chat with AI
Deck 9: Section 1: The Leadership Challenge
Full screen (f)
Question
Question
Question
Question
Unlock Deck
Sign up to unlock the cards in this deck!
Unlock Deck
Unlock Deck
1/4
Play
Full screen (f)
Deck 9: Section 1: The Leadership Challenge
1
SCENARIO:
Consider the pending Comprehensive Economic and Trade Agreement (CETA) between Canada and Europe. This will go far beyond the North American Free Trade Agreement (NAFTA) and is designed to eliminate thousands of tariffs, encourage foreign investment and promote movement of labour.
The deal will impact just about every sector of the Canadian economy as well as millions of workers and consumers. Canadian consumers might end up paying less for thousands of products made in Europe, such as cars. For Canadian business, a potential advantage is open access to Europe for hundreds of their products, some of which now face high tariffs.
However, many Canadian companies also worry they will be overwhelmed by new foreign competition. For example, the agreement will allow more than double the quota of cheese entering Canada from Europe. This could hurt Ontario and Quebec dairy farmers' market. However, the Canadian government has claimed it will subsidize those cheese producers, and that it will set up a marketing campaign for local cheese. The deal will also remove a trade barrier that currently protects Ontario wines and liquor from foreign competitors.
Explain in detail the benefits to Canada of entering into this free trade agreement with Europe (both reducing tariffs on European imports to Canada and Canadian exports to Europe). Discuss potential impact on consumers, employment, competitiveness, and culture in the Canadian context.
Consider the pending Comprehensive Economic and Trade Agreement (CETA) between Canada and Europe. This will go far beyond the North American Free Trade Agreement (NAFTA) and is designed to eliminate thousands of tariffs, encourage foreign investment and promote movement of labour.
The deal will impact just about every sector of the Canadian economy as well as millions of workers and consumers. Canadian consumers might end up paying less for thousands of products made in Europe, such as cars. For Canadian business, a potential advantage is open access to Europe for hundreds of their products, some of which now face high tariffs.
However, many Canadian companies also worry they will be overwhelmed by new foreign competition. For example, the agreement will allow more than double the quota of cheese entering Canada from Europe. This could hurt Ontario and Quebec dairy farmers' market. However, the Canadian government has claimed it will subsidize those cheese producers, and that it will set up a marketing campaign for local cheese. The deal will also remove a trade barrier that currently protects Ontario wines and liquor from foreign competitors.
Explain in detail the benefits to Canada of entering into this free trade agreement with Europe (both reducing tariffs on European imports to Canada and Canadian exports to Europe). Discuss potential impact on consumers, employment, competitiveness, and culture in the Canadian context.
Consumers
-Canadian consumers will have more choice/options and better prices as a result of free trade and the removal of tariffs on European imports. More European goods will end up in Canada and buyers will end up paying less for thousands of products made in Europe such as cars, cheese, wine...
Employment
-For Canadian companies, removing tariffs on goods exported to Europe provides greater access to 500M consumers and a $17T economy. As a result, Canadian exporters (like the beef and pork producers and automakers) will increase their sales and therefore create jobs for Canadians as their production increases. Estimates are that 80,000 jobs will be created for Canadians.
Competitiveness
-Foreign competition forces domestic businesses to improve their operations and their products or services and make them more innovative, efficient…competitive
-One of Canada's central objectives has been to encourage Canadian Businesses to become more competitive through exposing them to greater competition from global markets, in this case, the European Businesses.
Culture
-Doesn't really impact Canadian culture directly. But if there are Canadian cultural exports to Europe (Alice Munro, Cirque du Soleil…?), they can benefit from increased sales to the European market. As well as the ability for Canadians to gain greater access to European culture through their books, movies, music…
-Canadian consumers will have more choice/options and better prices as a result of free trade and the removal of tariffs on European imports. More European goods will end up in Canada and buyers will end up paying less for thousands of products made in Europe such as cars, cheese, wine...
Employment
-For Canadian companies, removing tariffs on goods exported to Europe provides greater access to 500M consumers and a $17T economy. As a result, Canadian exporters (like the beef and pork producers and automakers) will increase their sales and therefore create jobs for Canadians as their production increases. Estimates are that 80,000 jobs will be created for Canadians.
Competitiveness
-Foreign competition forces domestic businesses to improve their operations and their products or services and make them more innovative, efficient…competitive
-One of Canada's central objectives has been to encourage Canadian Businesses to become more competitive through exposing them to greater competition from global markets, in this case, the European Businesses.
Culture
-Doesn't really impact Canadian culture directly. But if there are Canadian cultural exports to Europe (Alice Munro, Cirque du Soleil…?), they can benefit from increased sales to the European market. As well as the ability for Canadians to gain greater access to European culture through their books, movies, music…
2
SCENARIO:
Consider the pending Comprehensive Economic and Trade Agreement (CETA) between Canada and Europe. This will go far beyond the North American Free Trade Agreement (NAFTA) and is designed to eliminate thousands of tariffs, encourage foreign investment and promote movement of labour.
The deal will impact just about every sector of the Canadian economy as well as millions of workers and consumers. Canadian consumers might end up paying less for thousands of products made in Europe, such as cars. For Canadian business, a potential advantage is open access to Europe for hundreds of their products, some of which now face high tariffs.
However, many Canadian companies also worry they will be overwhelmed by new foreign competition. For example, the agreement will allow more than double the quota of cheese entering Canada from Europe. This could hurt Ontario and Quebec dairy farmers' market. However, the Canadian government has claimed it will subsidize those cheese producers, and that it will set up a marketing campaign for local cheese. The deal will also remove a trade barrier that currently protects Ontario wines and liquor from foreign competitors.
What are the potential negative consequences of removing tariffs on European imports to Canada? Discuss potential impact on consumers, employment, competitiveness, and culture in the Canadian context.(8 marks)
Consider the pending Comprehensive Economic and Trade Agreement (CETA) between Canada and Europe. This will go far beyond the North American Free Trade Agreement (NAFTA) and is designed to eliminate thousands of tariffs, encourage foreign investment and promote movement of labour.
The deal will impact just about every sector of the Canadian economy as well as millions of workers and consumers. Canadian consumers might end up paying less for thousands of products made in Europe, such as cars. For Canadian business, a potential advantage is open access to Europe for hundreds of their products, some of which now face high tariffs.
However, many Canadian companies also worry they will be overwhelmed by new foreign competition. For example, the agreement will allow more than double the quota of cheese entering Canada from Europe. This could hurt Ontario and Quebec dairy farmers' market. However, the Canadian government has claimed it will subsidize those cheese producers, and that it will set up a marketing campaign for local cheese. The deal will also remove a trade barrier that currently protects Ontario wines and liquor from foreign competitors.
What are the potential negative consequences of removing tariffs on European imports to Canada? Discuss potential impact on consumers, employment, competitiveness, and culture in the Canadian context.(8 marks)
Consumers
-Not many negatives for consumers since they are the big winners in this deal. Though if Canadian retailers are forced out of business by European competitors, Canadians may end up with fewer home-made goods (if that somehow matters to consumers in a way not related to employment).
Employment
-Competition from larger European firms may be too strong for many Canadian businesses in some sectors- forcing bankruptcy, job losses through closures. Especially for cheese producers in Quebec and Ontario, and Ontario wines and liquor.
-Perhaps, they could argue that job losses could also arise if EU companies decide to shut down their Canadian subsidiaries and export their tariff-free goods to Canada.
Competitiveness
-Many Canadian businesses worry about being overwhelmed by intense new foreign competition because Europe is a much bigger market than Canada so their firms benefit from scale and efficiencies that Canadian companies cannot match.
-"If Canadian businesses do not learn as a nation to quickly take advantage of this deal they could be quickly overtaken by the European competitors."
-As with all trade agreements where countries specialize in their areas of comparative advantage, there are winners and losers. Some Canadian industries will expand and others will contract. Some businesses will become efficient, productive competitors, and some will go bankrupt.
Culture
Increased imports of European cultural products (books, movies, music…) can lead to a decline in Canadian cultural products. Though this risk is far less present than with NAFTA and American culture since Canadian culture is more similar to American (than European) and Canadians consume far more US cultural goods.
-Not many negatives for consumers since they are the big winners in this deal. Though if Canadian retailers are forced out of business by European competitors, Canadians may end up with fewer home-made goods (if that somehow matters to consumers in a way not related to employment).
Employment
-Competition from larger European firms may be too strong for many Canadian businesses in some sectors- forcing bankruptcy, job losses through closures. Especially for cheese producers in Quebec and Ontario, and Ontario wines and liquor.
-Perhaps, they could argue that job losses could also arise if EU companies decide to shut down their Canadian subsidiaries and export their tariff-free goods to Canada.
Competitiveness
-Many Canadian businesses worry about being overwhelmed by intense new foreign competition because Europe is a much bigger market than Canada so their firms benefit from scale and efficiencies that Canadian companies cannot match.
-"If Canadian businesses do not learn as a nation to quickly take advantage of this deal they could be quickly overtaken by the European competitors."
-As with all trade agreements where countries specialize in their areas of comparative advantage, there are winners and losers. Some Canadian industries will expand and others will contract. Some businesses will become efficient, productive competitors, and some will go bankrupt.
Culture
Increased imports of European cultural products (books, movies, music…) can lead to a decline in Canadian cultural products. Though this risk is far less present than with NAFTA and American culture since Canadian culture is more similar to American (than European) and Canadians consume far more US cultural goods.
3
In order to protect the dairy farmers, the Canadian government has assured the provinces it will pay compensation to cheese producers, and that it will set up a marketing campaign for local cheese. This is essentially a government subsidy to dairy farmers.
Explain why the Canadian Government should not play the role of guardian of business in this way.
Explain why the Canadian Government should not play the role of guardian of business in this way.
-The core problem of government subsidies (and protectionism) is the use of taxpayers' money to help one specific industry, fairness to other industries, the notion of 'letting the market decide' and ensuring open and fair competition, as well as the danger of industries becoming reliant on government for support.
-There are several theoretical points to consider: Protectionism, govt subsidies, bailouts, corporate welfare… essentially redistribute public money from the taxpayers to a few corporations. In other words, everyone pays so that a few can benefit. Why should cheese producers (mostly in Ontario and Quebec) get government subsidies and n
-Would these dairy farms survive on their own without government assistance? The competitive marketplace should decide which industries and firms are successful, not government.
-Subsidies also discourage firms from being more competitive, efficient, innovative… and result in higher prices for consumers (and possible retaliation from other trading partners).
-Great answers will push their thinking to explain how subsidies to dairy farms should not be used to favour some industries over others because it's very difficult for even the most astute investor to pick winning firms or industries, that it's foolish to think the government can do it. Spending public money on industries that turn out to be losers down the road is a wasteful and inefficient use of government funds.
-Subsidies are not merely harmless forms of assistance to businesses; rather, they constitute a form of trade barrier, just like tariffs, and they create unfair competition.
-Subsidies are unfair - they divert money away from more successful businesses and towards less successful ones (i.e., the dairy farms).
-Subsidies are contrary to the notion of capitalism - i.e., profitable companies should stay in business; companies that cannot compete should not be permitted to continue.
-Subsidies lead to higher taxes, government is simply redistributing public money to a few corporations.
-May be viewed as violating fair trade agreements (i.e, unfair to foreign competitors who must compete against government businesses)
-There are several theoretical points to consider: Protectionism, govt subsidies, bailouts, corporate welfare… essentially redistribute public money from the taxpayers to a few corporations. In other words, everyone pays so that a few can benefit. Why should cheese producers (mostly in Ontario and Quebec) get government subsidies and n
-Would these dairy farms survive on their own without government assistance? The competitive marketplace should decide which industries and firms are successful, not government.
-Subsidies also discourage firms from being more competitive, efficient, innovative… and result in higher prices for consumers (and possible retaliation from other trading partners).
-Great answers will push their thinking to explain how subsidies to dairy farms should not be used to favour some industries over others because it's very difficult for even the most astute investor to pick winning firms or industries, that it's foolish to think the government can do it. Spending public money on industries that turn out to be losers down the road is a wasteful and inefficient use of government funds.
-Subsidies are not merely harmless forms of assistance to businesses; rather, they constitute a form of trade barrier, just like tariffs, and they create unfair competition.
-Subsidies are unfair - they divert money away from more successful businesses and towards less successful ones (i.e., the dairy farms).
-Subsidies are contrary to the notion of capitalism - i.e., profitable companies should stay in business; companies that cannot compete should not be permitted to continue.
-Subsidies lead to higher taxes, government is simply redistributing public money to a few corporations.
-May be viewed as violating fair trade agreements (i.e, unfair to foreign competitors who must compete against government businesses)
4
In order to protect the dairy farmers, the Canadian government has assured the provinces it will pay compensation to cheese producers, and that it will set up a marketing campaign for local cheese. This is essentially a government subsidy to dairy farmers.
Explain why the Canadian Government should play the role of guardian of business in this way
Explain why the Canadian Government should play the role of guardian of business in this way
Unlock Deck
Unlock for access to all 4 flashcards in this deck.
Unlock Deck
k this deck
Unlock Deck
Unlock for access to all 4 flashcards in this deck.
