TED ROGERS SCHOOL OF BUSINESS

MANAGEMENT

GMS690 The North American Business Environment

MODULE 2.2
TRADE
AGREEMENTS
 FREE TRADE – PROS AND CONS

Source: The Balance (2020, April, 27)

Copyright 2020 Mark Viminitz
 FREE TRADE – Protectionism

Source: The Balance (2020, August, 21)

Copyright 2020 Mark Viminitz
FREE TRADE – Concerns

Copyright 2020 Mark Viminitz

Tariffs
• Duties/Tax imposed by a
government on
imported goods
• Designed to safeguard
domestic industry
• Free Trade Agreements focus
on the elimination of these
tariffs
• Create an environment where https://www.youtube.com/watch?v=KZUUMysAwlU
economic growth can flourish

Source: World Trade Organization (WTO) Copyright 2020 Mark Viminitz

 Currency Manipulation
• Key issue in Trade Agreements is the
manipulation of Currency
• There are three outcomes of
currency
manipulation
• Outcome #1

Source: http://www.americanautocouncil.org/currency-manipulation-101
Copyright 2020 Mark Viminitz
 Currency Manipulation
• Key issue in Trade Agreements is the
manipulation of Currency
• There are three outcomes of
currency
manipulation
• Outcome #2

Source: http://www.americanautocouncil.org/currency-manipulation-101
Copyright 2020 Mark Viminitz
 Currency Manipulation
• Key issue in Trade Agreements is the
manipulation of Currency
• There are three outcomes of
currency
manipulation
• Outcome #3

Source: http://www.americanautocouncil.org/currency-manipulation-101
Copyright 2020 Mark Viminitz
 BRETTON WOODS - 1944

Source: US Department of State Copyright 2020 Mark Viminitz

 BRETTON WOODS - 1944
• Bretton Woods New Hampshire July 1-22 1944

• Happened during WWII to make financial arrangements for the

postwar world after the expected defeat of Germany and
Japan.

• The conference was attended by experts noncommittally

representing
44 states or governments, including the Soviet Union.

• It drew up a project for the International Bank for Reconstruction and

Development (IBRD) to make long-term capital available to states
urgently needing such foreign aid, and a project for the International
Monetary Fund (IMF) to finance short-term imbalances in
international payments in order to stabilize exchange rates.

• Led to the formation of the GATT at the end of WWII

Source: US Department of State Copyright 2020 Mark Viminitz
 General Agreement on Tariffs and Trade
(GATT)
• Set of Multilateral Trade Agreements
aimed at the elimination of quotas and
the reduction of tariff duties among
contracting nations
• Signed October 1947 post WWII

Source: World Trade Organization (WTO) Copyright 2020 Mark Viminitz

 • Signed by 23 countries October 1947 in Geneva, Switzerland
• Free Trade Agreement eliminating tariffs and increasing international
trade
• Agreement had three main provisions
1. Most Favored Nations
2. Prohibited restriction on the number of imports and exports. The
exceptions were:
• When a government had a surplus of agricultural products.
• If a country needed to protect its balance of payments because
its foreign exchange reserves were low.
• Emerging market countries that needed to protect fledgling
industries
3. Developed countries agreed to eliminate tariffs on imports of
developing countries to boost their economies.
• GATT ended in 1994

Source: World Trade Organization (WTO) Copyright 2020 Mark Viminitz

World Trade Organization (WTO)
• Started in January 1995
• World Trade Organization is the only
global international organization
dealing with the rules of trade
between nations.
• The goal is to ensure that trade flows
as smoothly, predictably and freely as General Agreement on
possible Trade in Services (GATS)
Part of WTO - creates
• WTO has over 160 members legal framework for
representing 98% of world trade. addressing barriers
affecting trade in
professional services.
In effect January 1995.

Source: World Trade Organization (WTO)

Copyright 2020 Mark Viminitz
WTO has SIX key objectives:

1. to set and enforce rules for international trade,

2. to provide a forum for negotiating and monitoring
further trade liberalization,
3. to resolve trade disputes,
4. to increase the transparency of decision-making
processes,
5. to cooperate with other major international economic
institutions involved in global economic management,
and
6. to help developing countries benefit fully from the
global trading system. Although shared by the GATT, in
practice these goals have been pursued

Source: World Trade Organization (WTO)

Copyright 2020 Mark Viminitz
Organization for Economic Co-operation and
Development (OECD)
• International Organization focuses
on economic, social, and
environmental issues 34 Member
countries
• Established in 1960 by 18
European nations plus the US and
Canada
• OECD publishes economic reports,
statistical databases, analyses and
forecasts on the outlook for
economic growth worldwide

Source: Organization for Economic Co-operation and Development (OECD) Copyright 2020 Mark Viminitz
WW Trade Agreements
• WTO identifies ~420 Trade
Agreements worldwide
• There are approximately 23
Multilateral Trade Agreements that
exist in the World
• There are approximately 23
Multilateral Trade Agreements that
are in Negotiations

Source: World Trade Organization (WTO)

Copyright 2020 Mark Viminitz
Trade Agreements are not easy
• Meeting took place in 1986 in Punta del Este,
Uruguay
• Agenda included every outstanding trade
policy issue
• Extension of trade into several new areas, including
services, intellectual property, and reforms in
agriculture and textiles
• All GATT articles were up for review
• Largest trade negotiations mandate ever agreed to
and they had four years to make it happen!
• 1988 second meeting took place in Montreal
• 1990 meeting in Brussels was supposed to complete
the negotiations
• Stalled due to a disagreement on Agriculture Trade
• Talks
Source: were
World Trade extended
Organization (WTO) Copyright 2020 Mark Viminitz
• The negotiations were extended and in
1991 a draft called the “Final Act” was
compiled
• Negotiations continued over the next
two years with varied degrees of
success and failure, more conflicts
arose in the areas of services, market
access, and anti-dumping
• The ongoing conflict between the US
and the EU on agriculture was settled
(a deal known as the “Blair House
Accord -1993)
• April 1994 a deal was signed –
Marrakesh Morocco
• 123 participating countries

Source: World Trade Organization (WTO)

Copyright 2020 Mark Viminitz
Doha Development Agenda - 2001
• The Doha Round was the latest
meeting on trade negotiations among
WTO Members
• Took place in November 2001 in Doha,
Qatar
• Goal was to reform international trading
system through the introduction of
lower trade barriers and revised trade
rules
• Addressed problems of developing
countries and their ability to implement
WTO agreements AGREEMENT FAILED
The US, China, India, and EU would not make
• 14 years later the Doha agreement
concessions
ended
Source: World Trade Organization (WTO)
Copyright 2020 Mark Viminitz
BILATERAL TRADE AGREEMENTS
• Outside of USMCA Canada has 10 Bilateral and
Multilateral Free Trade Agreements:
Chile (CCFTA) Jordan (CJFTA)

Colombia (CCOFTA) Korea (CKFTA)

Costa Rica Panama (CPAFTA)

(CCRFTA)
Europe (EFTA) Peru (CPFTA)

Honduras (CHFTA) Israel (CIFTA)

Source: Government of Canada

Copyright 2020 Mark Viminitz
Comprehensive Economic and Trade
Agreement (CETA)
• Signed October 30th, 2016
• Primary purpose was to eliminate
98% of all tariffs on trade between
the Canada and the EU.
• Designed to create jobs and
growth.
• Key Provisions – Promote labor
rights, environmental protection,
and sustainable development and
climate action.

Source: Government of Canada

Copyright 2020 Mark Viminitz
Canada-Central American Four Free
Trade Agreement (CCA4FTA)
• 12 Rounds of Negotiations from
2001 to 2010

• No Agreement could be reached in

2010 and Canada pursued
Bilateral Trade Agreements with
the member countries

• Guatemala, El Salvador, Honduras,

and Nicaragua

Source: Government of Canada Copyright 2020 Mark Viminitz

 Foreign Investment Promotion and
Protection Agreement (FIPA)
• Canada has 24 FIPA’s with many
partner countries
• Bilateral agreements designed to
encourage foreign investment
through a framework of legally-
binding obligations and rights

“FIPAs are Canada’s name for bilateral investment treaties, which are used
by corporations globally to challenge public policies or community decisions
that interfere with their profits. Canada’s first FIPA took the form of a
single chapter (Chapter 11) in the North American Free Trade Agreement.
Because of extreme investment protections in”
Source: The Council of Canadians

Source: Government of Canada Copyright 2020 Mark Viminitz

Trans-Pacific Partnership (TPP)
• 2011 Obama/Clinton framed the TPP
and the pact was signed in 2016
• Was to be the World’s largest free trade
deal covering 40% of the global
economy
• 12 Countries were participating
• 30 Chapters covering tariffs on goods
and services, IP, e-commerce, labor and
environmental standards, dispute
resolution mechanisms
• Trump withdrew the U.S. from the
agreement in January 2017
TPP: https://www.youtube.com/watch?v=EYAWx02cEa4&t=326s

Source: Council on Foreign Relations (2019, Jan 4) Copyright 2020 Mark Viminitz
 Comprehensive and Progressive Trans-
Pacific Partnership (CPTPP)
• 2018
• The Comprehensive and Progressive
Agreement for Trans-Pacific Partnership
(CPTPP) is a free trade agreement
between Canada and 10 other countries
in the Asia-Pacific region:
• Australia, Brunei, Chile, Japan,
Malaysia, Mexico, New Zealand, Peru,
Singapore and Vietnam. https://www.youtube.com/watch?v=s2vJ2RtK-1A
• This trading bloc representing 495
million consumers and 13.5% of global
GDP, providing Canada with preferential
access to key markets in Asia and Latin
America

Source: Government of Canada Copyright 2020 Mark Viminitz

 Regional Comprehensive Economic
Partnership (RCEP)
• 2020
• World’s largest Trade Deal
• Members make up nearly 1/3 of the
world’s population
• 29% of the global GDP
• Elimination of Tariffs
• “Rules of Origin”
• Intellectual property

Source: https://www.bbc.com/news/world-asia-54949260
Copyright 2020 Mark Viminitz
1965 CANADA-US AUTO PACT
• Compromise agreement in efforts
to deal with a struggling Canadian
auto industry
• Led to the integration of the
Canadian and US auto industries
• Removed tariffs between the two
countries
• Provided job guarantees for
Canadian workers
P
r
o
d
u
Source: Canadian Labour Congress (2018) c Copyright 2020 Mark Viminitz
 Canadian-U.S. Free Trade Agreement
(CUSFTA)
• Pre-cursor to NAFTA
• 1986 Canada and the US began
negotiations
• Bilateral agreement signed
January
1989

Source: The Canada-U.S. Free Trade Agreement (1989) Copyright 2020 Mark Viminitz