International Trade: Relations between Canada and UK - Term Paper Example

?International Trade Table of Contents Introduction 3 2. Discussing the Importance of Investigating Trade Relations between Canada and UK 3 3. Characterising of the Trade between Canada and UK 3 4. Major Driving Forces of Trade between Canada and UK 4 4.1 Global Drivers 4 4.1.1 Economic Outlook 4 4.1.2 Demographic Factors 4 4.1.3 Country Specific Regulations 5 4.2 Domestic Drivers 5 5. Conclusions or Policy Suggestions 5 References 7 Appendix 8 Appendix 1 8 Appendix 2 9 1. Introduction Recently, increasing significance of international trade has been in turn augmenting competition in the global context along with contributing to the increasing socio-political interdependency of various nations through overlapping trade frameworks. In precise, changing trends of international trade has further been quite notably affecting global relationship patterns between nations in the political, social as well as economic aspects. Fundamentally, the international trade patterns also influence the global economic structure by means of demand and supply functions of various commodities. In precise, international trade is also defined as the process of exchanging capital through trading with products and services across the overseas countries (Grimwade 3). Emphasizing the modern trend in the international trade, the report intends to demonstrate a preliminary analysis regarding the influence of international trade relations amid United Kingdom (UK) and Canada during the post economic recession of 2009-2011. In this regard, the report would focus on critically assessing the import and export trade practices associated by companies from these two nations, to further note the impact of international trade on Canada. 2. Discussing the Importance of Investigating Trade Relations between Canada and UK The trade history between Canada and UK reveals to be principally focused on the transfer of knowledge–based products and/or services along with technology based commodities, prior to the invasion of global economic recession. However, the trade relation between these two developed regions has been identified to involve numbers of influencing factors, which primitively became apparent during the years 2009 to 2011, i.e. in the post-recessionary period. In relation to the trade practices over the current years, it can be viewed that UK is the second-biggest recipient along with third imperative source of Canada. During this period, the trade practice of Canada with the UK was significantly valued US$86.8 billion concerning the country’s different inward and outward trade activities. Moreover, the direct trade investment of Canada with the UK can also be apparently noted as 7.3% of annual growth rate during the years 2007-2012 (Tremblay 2). With respect to its trade relation with Canada, the UK can be considered as one of the largest and prominent trade partners for the Canadian corporations in comparison to other different overseas countries. However, the country had also faced significant challenges due to the various influencing factors including trade regulations, economic instability along with barriers in the deregulatory guidelines that had ultimately lessened the potentialities of Canada while performing trade with the UK. In this concern, the country has faced a decline of 7% in export trade activities with the UK. Correspondingly, the annual import activities of Canada with the UK had also fallen by 16% as compared to the year 2008 (Holden 2). 3. Characterising of the Trade between Canada and UK In relation to the increasing competition in the global trade environment, the outward and inward investment portfolios significantly define the continuous development of the Canadian trade with the global countries. According to the recent statistical scenario, it has been witnessed that the country has been experiencing a rapid growth in terms of annual direct investment (inward and outward) as compared to the other global nations (Zhou 49). Canada’s major global trading partners in terms of export and import practices in the year 2011 have been represented in the Appendix1. With reference to the trade operations of Canada during the year 2009-2011, it has been identified that UK is the second largest global destination of Canada in terms of export activities. The UK has contributed 4.2% in export and 2.32% in import practices with Canada during the year 2011. Moreover, the trade relation between Canada and UK has also been observed to face significant hurdles. In this concern, the import activities between these two nations, from the year 2007 exhibits a certain degree of instability faced by the Canadian corporations while purchasing products and/or services from the UK suppliers. Therefore, the statistical figure (refer to Appendix 2) signifies the export, import and overall balance of trade activities of Canada with UK and other global countries (Statistics Canada, 2013). With reference to the above represented statistical enclosure, it has been observed that the international trade practice of Canada is centrally focused on conducting a large variety of export and import activities with the US. Concerning the trade relation with the UK, the export activities performed by Canada has been identified to achieve a rapid export growth within the period of 2009 to 2011 due to the rising demand of merchandises, manufacturing items along with machineries and transport equipments. However, the country was found to suffer a significant deficiency in its import activities. The import activities of UK products and services into the Canadian market have been recognised to face significant decline in terms of its annual growth during the period of 2009 to 2011. The declining face in the import activities between Canada and UK has been observed due to the certain influencing factors that have been addressed in detail in the following discussion. 4. Major Driving Forces of Trade between Canada and UK In relation to theoretical context, international trade patterns involve three major key drivers including global drivers and domestic driving factors that significantly influence the trade operations of the countries with other overseas nations (Forfas 29). With regard to the major influencing drivers of international trade, the factors acting as determinants in the trade relation between Canada and UK can be characterised as follows. 4.1 Global Drivers 4.1.1 Economic Outlook The economic outlook can be considered as one of the major global drivers, which has a major bearing on the trade relations among the countries, i.e. Canada and the UK. In relation to the trade relation currently persisting between Canada and the UK, a significant difference in the economic conditions of both the countries, during the period of 2009-2011, has been a major influencing factor (Forfas 36). According to the economic conditions of the UK, the country had been identified to experience a momentum decline in terms of its Gross Domestic Product (GDP), annual income and per capita income growth as compared to Canada. Therefore, the economic outlook of both the countries can be considered as a major influencing factor, which had significant impacts on their trade relation in the post-recessionary phase (Office for Budget Responsibility 8). 4.1.2 Demographic Factors In this regard, the changing demographic trends, in the context of population growth and emerging market scenario, can also be considered to significantly influence the trade relation among UK and Canada, especially in the post-recession phase. The changes in customer demands, along with their diverse income level conditions have thereafter significantly influences the import and export activities between these countries. 4.1.3 Country Specific Regulations The country specific trade regulation is also a primary factor, which can be recognised to impost significant impacts on the nations, while performing international trade. In relation to the trade regulations of Canada and UK, it can be observed that major differences associated with documentation of policies during export and import activities, can be considered as a major constraint. Moreover, legal and contractual disputes along with significant differences in Intellectual Property protection issues have also been identified to create a major constraint in the import and export business activities between Canada and UK, during the period of 2009-2011. However, in relation to the recent changes in trade relation between Canada and the UK, it can be viewed that the bilateral trade agreement between these two countries has significantly empowered the inward along with the outward transactions (OECD 12). 4.2 Domestic Drivers In relation to the domestic drivers influencing international trade, the factors including the trends in the domestic market demands, transportation or logistic infrastructure along with foreign affiliate externalities, are few of the major concerns. With respect to the trade relation between Canada and the UK, the changing trend in market demands relating to imported product and/or services has been identified to influence the overall trade relations between the countries6. Moreover, differences in the countries’ transportation or logistic infrastructure had also significantly influenced the trade relations of the UK firms while conducting import activities with Canadian marketers. Additionally, market opportunities and challenges of these two particular regions have also been identified to convey various issues associated with the trade practices. In this regard, the Canadian firms have faced numerous difficulties associated with the trade policies and governmental regulations in performing trade activities with UK after 2008 (OECD 71). 5. Conclusions or Policy Suggestions Based on the overall discussion of the report, it has been identified that the international trade activities of Canada has been contributing to its rapid growth along with building strong relationship with the global countries. However, it is also noteworthy that in its recent performances, the country has also faced different concerns due to the major influencing drivers in the international trade practices. The discussion has incorporated various influencing factors that created different types of constraints for Canada in performing trade activities with UK. In order to effectively address the existing barriers in trade activities with UK, the development of political relationship can play a major role for Canada in increasing its import and export revenue generation. According to the present trade statistics, it has been apparently observed that the US is the key destination of Canada in terms of exporting and importing a range of products and/or services. In this regard, the development of strong political relationship and deregulation of policy barriers can help both Canada and UK to perform effective trade activities. Moreover, minimisation of trade barriers associated with the domestic and global trades influencing factors would also enable Canada to conduct effective trade operations between with the UK. References Forfas, 2012. Key Skills for Enterprise to Trade Internationally.” “Drivers of Change.” http://www.forfas.ie/media/EGFSB22062012Key_Skills_for_Enterprise_to_Trade_Internationally.pdf Grimwade, Nigel. International Trade: New Patterns of Trade, Production & Investment. United States: Routledge. 2000. Holden, Michael, 2010. “Canadian Trade Investment Activity: Canada United-United Kingdom.” Liberty of Parliament: 1-3. OECD. Highlights of the International Transport Forum 2012: Seamless Transport: Making Connections. Germany: OECD Publishing, 2012. OECD. Space 2030: Exploring the Future of Space Applications. France: OECD Publishing, 2004. Office for Budget Responsibility. 2012. “Economic and Fiscal Outlook.” “Economic Outlook.” http://cdn.budgetresponsibility.independent.gov.uk/Autumn2011EFO_web_version138469072346.pdf Statistics Canada. 2013. “Imports, Exports and Trade Balance of Goods on a Balance-of-Payments Basis, by Country or Country Grouping.” “Summary Tables.” http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/gblec02a-eng.htm Tremblay, Pascal, 2013. “Direct Investment between Canada and the World”. Liberty of Parliament: 1-4. Zhou, Li. No Date. “International Trade”. Econ 421: 1-53. Appendix Appendix 1 (Source: Zhou 49) Appendix 2 (Source: Statistics Canada, 2013) Read More