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.
Answer:
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
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, 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)
Answer:
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.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
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.
Answer:
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
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, 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)
Answer:
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.
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
