Recommendations on Improving Trade between Canada and Germany by 2030.
Introduction
Canada and Germany are close allies and enjoy continued engagements in terms of trade. They both have made trade agreements that have eased their import and export activities. To improve trade between the two countries, the German government will focus on the agricultural sector due to its increased expansion and ranking. Involvement in trade agreements and relations will improve the trade relationship and trade barriers between the two countries. Labour issues will also be addressed through the agreements and engagements between both countries. Improving trade between Canada and Germany includes working on policies, regulations, interrelations, and agreements that help to facilitate and maintain it.
Absolute and comparative advantages, Sectors to take advantage of
The absolute advantages of Canada are agricultural production and mining activities because of the low cost of land and natural resources. Therefore, Canada has a comparative advantage in the production of agricultural products because of the available resources. Germany has an absolute advantage in beer production and therefore has a comparative advantage in brewing. Canada has been one of the largest countries in the world to produce and export agri-food products and their strengths being the vast natural resources, technology, and skilled labour force (Schumacher, 2012, 49). Germany produces a wide variety of quality beers which are uniquely brewed and more innovative brewers continue to produce outstanding non-mainstream beers.
Our trade strategy should focus on the agricultural sector because according to Bonnet (2017, 1), the Canadian government plans on expanding the food and farm sector and increase agri-food exports. It is a sector that has contributed to their economic growth and has maintained a long term growth and has been ranked top five in being among the largest world’s exporters of agriculture and agri-food products. The agricultural sector is a sector that the Canadians have been involved in for a long time and they, therefore, understand every aspect surrounding it, and therefore emphasizing our strategy there will yield positive outcomes. Food production exists in both countries whereby each country produces different types of food products. This is a sector that our strategy would take advantage of because the two countries could work towards trade exchange on the food products.
Trade blocs or agreements
Canada- Germany relations that could help in building trade between the two countries include having a bilateral relationship where they both enjoy a friendly partnership. This is displayed in their active collaboration internationally and the healthy economic and investment associations. Both countries are global partners that have a shared commitment to strengthening multilateralism. They are both members of the organization for economic cooperation and development and the world trade organization. They share common values and interests in fields such as human rights, democracy and the rule of law universal peace and security, international trade, and the environs and contending with climate change (Government of Canada, 2020, 1). The two countries have a trade relationship and Germany which has the leading economy in Europe and is among the biggest internationally is a main economic partner for Canada. Canada and Germany have a strong and diverse commercial relation that covers trade, investment, science, and technology. Germany is the largest export market for Canada in the EU and they both engage in export and import kinds of trade. Both countries have been involved in joint research projects bringing together stakeholders, governments, and research organizations among others. All these relationships between the two countries will aid Germany in building trade with Canada. “The Canada-European Union Comprehensive Economic and Trade Agreement” will make it easier for doing business. This is because the agreement has helped in the reduction of tariffs and has eased non-tariff barriers as well. Canada also has a trade facilitation and logistics Agreement that will be helpful because it will help in the movement of products between manufacturers and consumers which then make the supply chains more effective hence reducing prices and hurdles that are encountered by the traders
Tariff and non-tariff barriers
There exist customs tariffs for German exporters and importers, and border barriers that make it difficult for German exporters to access the Canadian market. Non-tariff barriers that create major obstacles include technical and non-technical measures. These include barriers such as labeling and packaging requirements, pre-shipment inspection, and antidumping measures. Engaging in trade Agreements with Canada will help to reduce these barriers and improve the trade relationship which will also increase job opportunities (Yalcin, Kinzius & Felbermayr 2017, 5). An example is the “The Canada-European Union Comprehensive Economic and Trade Agreement” which will help to eliminate a large percent of tariff lines for manufactured products, agriculture, and agri-food products. It will also help to reduce technical barriers and regulatory requirements that are discriminatory.
Environmental or labour issues
The labour issue that has to be addressed is the lack of laborers since most of the people seem to be seeking jobs outside the agricultural sector. This sector is registering a large percentage of the vacancy rate in the farms which is a challenge that is facing the sector due to the lack of laborers to fill these vacant positions (VanRaes, 2018, 1). This will have a great impact on the labor market and this needs to be addressed. This issue could be addressed by the farmers turning to technology and machines to fill in the vacancies. The farmers might need to turn to agricultural products that do not require manual labor for them to thrive and for trade to take place effectively. Finding out the reason why the sector is short of laborers would be important to be able to know the root cause of the labor issue and address it accordingly. Research shows that seasonality and low wages and the key issues in the labor problem. Seasonal jobs are a challenge and during the seasonal peaks, the laborers have to work for long hours at low wages.
Cultural relationships or immigration policies
For cultural relations, Canada and Germany, both have an advantage as a result of their strong relations and individual contacts. Through travels from one country to the other, they share a cultural relationship. Academic connections are also vivacious whereby students in both countries travel to either of the countries for college, university, or high school. As part of the exchange programs, both Germans and Canadians travel from their respective countries to research and study (Government of Canada, 2020, 1). Both countries cultivate an active cultural exchange whereby a lot of artists from Canada become an integral part of German cultural life and so do the German artist in Canada. A cultural agreement between the two countries was signed in 1975. Canada and Germany have a good cultural relationship and this clearly shows that they will help in trade between the two countries.
Conclusion
The top priorities for the German government include getting involved in trade agreements with Canada. This is important because the agreements can help to develop larger markets. They eliminate most of the tariffs that exist and provide better access to the goods and services markets. With the agreements, Germany will be able to safeguard and expand its prosperity in Canada. The German government should improve cooperation and relations among economic actors. Improvement in cooperation could favor trade growth between the two countries among exporters and business actors. Trade facilitation and logistics is another priority for the government because of the difficulties experienced during the movement of goods. For Germany to get involved in trade with Canada, they require continuous supply chains, effective border management, clearance procedures, and logistics infrastructure and services.
References
Bonnet R. (2017) Expanding markets for agricultural products and streamlining regulations will help Canada meet the potential for growth in this powerful sector. Retrieved from: https://policyoptions.irpp.org/magazines/april-2017/taking-canadas-agricultural-trade-to- the-next-level/
Government of Canada (2020) Canada-Germany relations: Canada’s areas of action Retrieved from: https://www.international.gc.ca/country-pays/german allemagne/relations.aspx?lang=eng
Schumacher, R. (2012). Free trade and absolute and comparative advantage: a critical
comparison of two major theories of international trade (Vol. 16). Universitätsverlag
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World Bank Group (2018) Stronger Open Trade Policies Enable Economic Growth for All.
Retrieved from: https://www.worldbank.org/en/results/2018/04/03/stronger-open-trade-
policies-enables-economic-growth-for-all
VanRaes, S. (2018). Canada faces its own farm labor gap, and it’s going to get much worse. Retrieved from: https://www.country-guide.ca/guide-business/canada-is-facing-a-farm- labour-gap-and-its-going-to-get-much-worse/
Yalcin, E., Kinzius, L., & Felbermayr, G. (2017). Hidden Protectionism Non-Tariff Barriers and
Implications for International Trade. Study of the Ifo Institute on behalf of the Bertelsmann Foundation Final Report (GED Study) on November 17, 2017.
