SUBJECT:
BUSINESS PROTECTIONISIM IN CANADA
PURPOSE:
This briefing note is a recommendation for changes in policy pertaining
to foreign entities conducting business on Canadian territory.
ISSUE:
There is not enough regulation for the management of foreign business
entities conducting business in Canada.
Background:
There is a very real threat to Canadian
business. Increased competition has
driven some Canadian businesses to make revenue in other sectors. One such example is Blackberry. This company was a leader in the cell phone
market during the early 2000’s. It has since been outclassed by the likes of
such competitors as Apple and Google. Blackberry
was a phone manufacturer that produced highly secure cellphones free of the
risk of intrusion. Their decline
commenced when competitors designed what people perceived to be better
products. Through appealing to the
masses, Blackberry and other notable companies such as Nokia have faltered. These companies are now a fraction of their
former dominance. What is interesting to
note here is that governments had let this happen by not implementing
protectionist policy to prevent these companies from going down under. Through the decline of these companies, the governments
in which these companies are head quartered, have suffered a reduced sphere of
influence. It should be a national
interest to protect these companies from loosing against rival
competitors. Furthermore, countries such
as China have implemented protectionist policy in the event foreign companies
would like to do business with them. Countries
such as Canada have not done so. This
must change if Canadian corporations are to challenge these foreign
companies. In China, as mentioned, their
policy is that technology must be shared with a local company if foreigners
want to sell their product in the country.
Through this policy, China has amassed technology that rivals American
technology. One of the seven United
Nations security threats is considered to be economic. Through not implementing protectionist policy,
Canadian business has been left unarmed and at risk for exploitation. There have been provisions and progress under
the USMCA trade deal and the US- SINO trade negotiations however. Under the USMCA, the digital economy is
protected. The deal also ensures minimum
rate of pay for auto manufacturers in any of the three countries. The USMCA also has provisions for the environment. The US-SINO trade is in phase one at the
moment. The provisions of this agreement
to take note of are specifically pertaining to IP theft. China has promised to address this issue
however it is still an ongoing issue that needs urgent rectification as US and
Canadian business continues to suffer.
For example, IP theft in China amounts to $350- $400 billion in Europe
and $300 billion in the USA. This is a
direct example of an economic threat as per the UN.
Considerations:
The economy of Canada is in a state of
peril. Their GDP in 2019 was $1.736
trillion according to the World Bank.
GDP consist of such variables as import/ export, financial markets, labor
or talent pool and etc. These are all
added up to give a value referred to as GDP which then can be compared to other
countries to determine how living standards fair. The main objective is to reduce the
deficit. Canada has been experiencing a
deficit since the Liberals have assumed the government. The deficit in Canada at the moment is 19.6%
of the countries economic output. It is
headed to $330 billion this fiscal year.
The fact that Canada has not done much to protect its corporations
homebound is very alarming. It is these
companies that conduct trade which convinces foreign companies to invest in
Canadian initiatives designed to bring capital into the country. The objective is clearly to keep funds in
Canada and also ensure that Canadians reduce foreign spending while increasing sales
to other countries. Regardless of this, Canada’s budget deficit
has grown by more than any other G20 country amid the COVID pandemic. By implementing protectionist policy Canada
can keep the GDP stable for the years to come.
It will also ensure local business is guaranteed. The main stakeholders for this matter are the
corporations foreign or local, and the Canadian government.
Options:
Option 1:
Technology share.
This option requires a lot of cooperation
which means that it is not as feasible as some of the options available. This option may also dissuade foreign
business. Technology share is a policy China
has implemented with great effectiveness, as foreign companies are attracted to
the large population of their country.
Technology share requires companies to weigh the pros and cons of proliferation
into the Chinese market. Clearly, the
political regime of the country is not favorable to western companies. Despite this however, companies have managed
to negotiate terms with the Chinese Communist Party, although what evidently
results is a loss of western values and then a method by which China can
exploit politics in the west. Therefore,
Canadian companies must combat these policies with protectionist policies which
serve to uphold the values of Canadians.
This option is very sustainable as it will bring fresh ideas into the
field. By having trade secrets shared
with Canadian companies, Canadians can improve upon these methods and release
products accordingly. This is an option
that is very equitable as it serves to protect the western values.
Option 2:
Inventory or stock of 20% Canadian made products to be sold.
This option is not very feasible as companies
would have to reshuffle inventory and stock.
They may have to change suppliers or add suppliers to the supply
chain. However, this option is the most
equitable for the Canadian businessman. With
this option, it ensures that Canadian business is guaranteed and
prioritized. This option is very
sustainable as it serves to protect Canadians from uncertain economic times.
Option 3:
Combination of Option 1 and Option 2.
This is the least feasible option
available. This would require a lot of
work to implement. With this option, corporation
is a must. Stakeholders must then come
together to create a protectionist economy serving the interest of both the Canadian
citizen and the Canadian businessman.
This option therefore is the most equitable and most sustainable as
business in Canada will be safeguarded from intrusion.
Option 4:
Status quo: Not working which is
why we have options.
This is the most feasible option however,
it does little to protect Canadian business and the Canadian citizen
thereafter. Selecting this option would
mean business as usual and it would leave exploits open which have the
potential to jeopardize Canadian business.
Canada needs to think about the future of business and this option is
not that.
Recommendation:
Option three is recommended.
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