Assignment Sample on ECON5006 Impact of Immigration on International Trade

Introduction

  • Expeditious surge in foreign-born population in various countries has prompted substantial research on socio-economic effects of immigration.
  • Exports enhance and also existence of immigrants in transmission industries decreases production cost of units
  • Immigration increases international competitiveness of host country widely which involves lower prices and superior labour mobility.
  • Migrants involved in business is able to increase trust in trade associations among host and home countries

Trade facilitation and impact of migration is implemented to export and import although home preference impacts only imports. In this segment a complete overview of impact of immigration on international trade would be provided through illustration of relevant data and information.

Effect of Immigration on International Trade

  • International trade services have evolved massively in recent decades and has outpaced surge in effective trade
  • During 1980-2011, trade on global goods emerged on an average of 7.3 percent annually although services trade emerged at 8.3 percent annually (Norface-migration.org, 2021)
  • Several immigrants have substituted or promoted trade among trading partners and host country
  • Immigrants further diminished import and export costs from their host country by providing assistance to domestic firms.

These domestic firms mitigated institutional and cultural barriers with foreign market. Moreover, reduction in cost is an essential aspect as offering service abroad demands a comprehending capability of cultural specifications which is governed by selling of physical items overseas.

Canadian Immigration system on trade

  • Canadian immigration infrastructure is leading globally and offers several opportunities for individuals who would visit this destination.
  • “Federal Skilled Trade Program” is program in Canada which is handled by Express immigration entry system and is framed for international trade workers (Canada.ca, 2021)
  • It enables workers possessing working experience for executing trade occupations to immigrate to Canada.
  • For unskilled workers immigration to Canada possesses a fast forward process which would provide them express entry to Canada.

For execution of trade operations in Canada, trade programs are organised through “National Occupation Classification NOC groups”. These groups are categorised into various occupations and involve skill B type.

Advantages of International trade

  • Optimum allocation is a significant advantage of international trade which involves geographical division and international specialisation of labour
  • It enables laborers to promote optimum allocation of global resources fabricating possibility of effectively utilising these aspects (Weforum.org, 2021).
  • Enhancement in exchangeable possession value depicts wealth of various trading countries and entities for enjoyment.
  • Cultural ties and exchange among various countries propagate formulation oof mutual trading.

Therefore, these advantages are a significant aspect as it enables effective trading in international destinations. Moreover, competition from foreign items in domestic markets lead to enhancement in overall quality and efficiency of their products.

Disadvantages of International Trade

  • Resource exhaustion is significant disadvantage of international trade and involves constant and larger exports by a company
  • Therefore, in this case minerals and raw materials might get exhausted if latest resources are developed and tapped (Efinancemanagement.com, 2021).
  • A major propensity towards import would diminish in domestic savings of host country.
  • Furthermore, it would adversely affect capital formation rate and growth procedures.

Over interdependence is a drawback of various international trades as it discourages self-reliance and self-sufficiency in economy of a country. Thus, if a country is interdependent, its interdependence based on economic grounds is jeopardized and this leads to non-availability of free trade globally.

Immigrants impact on service trade

  • Potential diminished in bilateral costs of trade and immigration service to various destinations would enhance overall productivity of a company (Rates.ca, 2021)
  • It also enhances profits related to sales overseas and prospective sources of productivity acquires productive advantages which provides diversified effect.

Immigrants foster assistance and creativity through generation of specialisation effects and latest ideas which would enable immigrants with a comparative benefit in performing specific production tasks.

Trade and productivity gains

  • Immigrants from a specific country based on local labour market enables companies to export services by 6 to 10 percent in that area (Waikato.ac.nz, 2021).
  • This effect is primarily provided through export surge in various firms that provide service to markets than latest companies.

These effects are powerful for services as they are intensive in utilisation of legal and language expertise although it is not impactful for technical service exports. Thus, cultural aspects play a significant role in fabrication of effective channels for trade creation services.

Immigration prompts international trade

  • Immigrants in Canada use some products in Canada as normally they did in their native country.
  • Immigrants bring such product knowledge and ideas which helps to increase the export trades in this particular country (Migrationdataportal.org, 2021).
  • This product knowledge helps to increase and gain customer loyalty in teams of exporting business in the international marketplace.
  • The conference board of Canada reported that 1% of the increased number of immigrants in Canada corresponds with 0.11% of import tendency in the international stage (Rates.ca, 2021).

It’s been observed that in every smallest trading partnership have a direct and indirect involvement of immigrants. The immigrants basically try to export their own business products in Canada, along with that they bring such effective knowledge regarding that product to expand their market. That knowledge mainly helps the Canadian to increase the business trade in the international market to implement sustainability and profitability in an effective manner.

Immigration helps to improve trade relation between countries

  • Immigrant’s network plays an important role in promoting and exporting the trade across countries.
  • This helps to provide such effective information of market countries to both the countries

Moreover, this can be able to provide important information regarding market situations that helps to gain knowledge regarding market cost of new markets. Therefore, it helps to reduce the transaction cost of two different countries.

Linking service trade and immigrants

  • Immigrants help to reduce the trade cost and transaction cost for trade exports and imports between the countries.
  • The NAICS industry in UK have reported that 183 immigrants trading partners into their international trade position have defined their net selling value of 13% and that have increased free on-board value (Migrationdataportal.org, 2021).

The Increased number of immigrants is able to improve the promoting and exporting trade in an effective manner between two different countries.

WTO Establishment

  • Canada is a global superpower with a strong commitment to a global regulations system and a strong advocate for multilateral and individual trade agreements
  • “World Trade Organisation” was founded in 1995 with the goal of developing a regulation trading system (Fasken.com, 2021)
  • Basic concepts of this accords are tariff reductions and non-discrimination through government product and services (Zhu, 2016, p.143)

This WTO establishment can help reduction of tariff and non-discrimination among business through responsibilities to give national governments’ products, services, and investment with national treatment. It is achieved therefore by signing a slew of agreements that provide commodities, services, and property rights trade, as well as resolving disputes, procurement practices, and trade policies in government

CETA Trade Agreement

  • “Comprehensive Economic and Trade Agreement” is a trading deal between EU and Canada that includes nearly all economic areas between the two countries
  • In September 2017, it went into effect provisionally, removing 98 percent of customs duties
  • 99 percent of customs duties on eligible products will be eliminated within seven years (International.gc.ca, 2021)
  • Government procurement chapter of CETA grants Canadian suppliers’ preferential access to massive EU government procurement market (Immigration.ca, 2021)
  • It extends from EU institutions downwards through national governments to local, educational, teachers union, and health-care organisations

CETA may emerge to become the most important trade deal Canada has signed since NAFTA, given its vast breadth and coverage, as well as ample time for its full advantages to be realised.

Trade Performance

  • Canada product exports increased by 6.5 % to $585 billion in 2018 with exporting prices going up 2.2 percent and net exports enhanced by 4.1% (International.gc.ca, 2021)
  • Similarly, Canada’s product imports grew by 5.8% to $607 billion due to price imports and volume rose by 2.4 percent and 3.3 percent, respectively (International.gc.ca, 2021)
  • Therefore, overall products trades surpassed $1.2 trillion for the first time
  • Goods trade imbalance in Canada has shrunk by $2.7 billion to $22 billion as in 2018 exports exceed imports (International.gc.ca, 2021)

Therefore, it can be said that Canadian Trading performance has grown in recent times, which creates a greater impact on business. Moreover, trade imbalance has been decreasing that previous year due to increase in exports that imports.

Canada Trade services by Sector

  • Tourism accounting for over a half of all services exports in 2018, and they were the extremely fast industry once again, increasing by 8.1 percent to $29 billion
  • Corporate travel fell by 3.6 percent while personnel increased by 9.9%
  • Transportation of water grew faster that air, with exports of transportation services rising 4.9 percent to $18 billion

Export in commercial service remains most important and accounts for more than 60% of overall exports. This increased by 5.2 percent to achieve $73 billion in 2018.

CONTI…

  • Canadian exports of services to the EU increased significantly, gaining $1.5 billion, or 8.0 percent, to $21 billion
  • Commercial services, which increased by $1.2 billion, accounted for the majority of the growth
  • Services imports increased modestly, rising 0.5 percent, or $131 million, to $26 billion

Therefore, Canadian exports provided a significant rise in overall EU and most of the growth was dependent on commercial services.

Customs of trade and NAFTA countries

  • Among OECD listed countries Canada is the only nation which has an open economy which fosters a friendly environment for trade and import-export
  • NAFTA policies means U. S’s policies of amending North American Free Trade Agreement (info, 2021)
  • It was a free trade agreement between three counties such as Mexico, US and Canada

Open economy has helped Canada significantly for more than 30 years to develop their economy. Import or export merchandise is significantly important for Canada as their import trade constitutes their 30% of their total GDP. Canada’s economy has witnessed an exponential growth from the 1990s when they participated in their NAFTA policies. NAFTA policies means U. S’s policies of amending North American Free Trade Agreement.  NAFTA policies were imposed from 1994 and its phase was up to 2008.

CONTI…

  • Cross border services between Canada and US was improved by $2.4 billion
  • Canada’s economy improved from 577 billion dollars to 1.77 trillion dollars in 2020 (Igc.ca, 2021)
  • Canada could export merchandise worth 266 billion dollars through free trade policies

NAFTA trade policies allowed Canada to export their merchandise among the US and Mexico without any extra tariffs. They were able to export their merchandise worth more than $266 billion through these trade policies. Their economies also improved by more than 2 billion dollars through this trade policy. Moreover, through this trade agreement Canadian citizens were also allowed to do jobs in US. Thus, their customs policy relieved their unemployment issues with significant efficiency.

Canada’s approach of foreign trade policies

  • Canada aims at sustainability and inclusiveness as their basics of trade policies
  • They aim at diversifying their opportunities while maintaining a trade policy with any foreign country (Igc.ca, 2021)
  • Canada only charges 5% value of the imported good as their GST (Goods and Services Tax)
  • Canada attempts to take part in multilateral stages such as OECD, G7, G20

Multilateral existence of Canada in various platforms such as OECD, G7 and G20 helps them to maintain their trade relations at multiple levels. They maintain their trade retaliation with developed nations in the G7 summit while they maintain their trade relation with developing countries in the G20 summits. Their diversifying approaches are also helpful for their growth of economy.

Significance of exports in Canada

  • Canada mainly focussed on their expert policies after 2008 economic recession
  • In 2015 their export constitutes their 30% of total GDP which touched 1 trillion within 2018 (org, 2021)
  • 16% of employment are done through Canada’s export business

Since 1988 Canada has become interested in maintaining viable trade relations among many other nations such as the US and UK. through their trade and export they were able to absorb the shock of the economic crisis of 2008. Currently 30% of their GDP is constituted by export industry.

Significance of immigration policies

  • Since 2015 Canada has been facing shortage in federal skilled workers
  • They have provided a relocation for more than 402,000 occupants in 2020 (ca, 2021)
  • They also focussed on their skill improvement through Francophone communities

Canada has been focusing on relocating immigrants since 2015. Their immigration policies are helpful in eradicating their issues of skill shortage. Immigrant’s workforce is also helpful for Canada’s policies to support their senior citizens.

References

Journals

Zhu, Y., 2016. Immigration policy, settlement service, and immigrant mothers in neoliberal Canada: A feminist analysis. Canadian Ethnic Studies, 48(2), pp.143-156.

Website

International.gc.ca, 2021, Canada’s State of Trade 2019, Viewed on 15/07/2021, from <https://www.international.gc.ca/gac-amc/publications/economist-economiste/state_of_trade-commerce_international-2019.aspx?lang=eng#Section2.2>

Worlddata.info, 2021, NAFTA members North American Free Trade Agreement, Viewed on 10/07/2021, from <https://www.worlddata.info/trade-agreements/nafta-north-american-free-trade-agreement.php>

International.gc.ca, 2021, North American free trade agreement (NAFTA) – Resources, Viewed on 11/07/2021, from <https://www.international.gc.ca/trade-commerce/consultations/nafta-alena/toolkit-outils.aspx?lang=eng>

Fraserinstitute.org, 2021, The Importance of International Trade to the Canadian Economy: An Overview, Viewed on 15/07/2021. from <https://www.fraserinstitute.org/studies/the-importance-of-international-trade-to-the-canadian-economy-an-overview>

Canada.ca, 2021, 2020 Annual Report to Parliament on Immigration, Viewed on 14/07/2021, from <https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications-manuals/annual-report-parliament-immigration-2020.html>

Canada.ca, 2021, Understanding Canada’s Immigration System, Viewed on 10/08/2021 <https://www.canada.ca/en/immigration-refugees-citizenship/campaigns/irregular-border-crossings-asylum/understanding-the-system.html>

Migrationdataportal.org, 2021, Migration And Trade, Viewed on 10/08/2021 <https://www.migrationdataportal.org/themes/migration-and-trade>

Norface-migration.org, 2021, The Impact Of Immigration On International Trade: A Meta-Analysis, Viewed on 10/08/2021 < https://www.norface-migration.org/publ_uploads/NDP_20_11.pdf>

Rates.ca, 2021, How Immigration Boosts Canadian Trade, Viewed on 10/08/2021 <https://rates.ca/resources/immigration-fosters-innovation-boosts-canadas-trade-relations>

Weforum.org, 2021, How Does Immigration Affect Trade In Services?, Viewed on 10/08/2021 <https://www.weforum.org/agenda/2015/06/how-does-immigration-affect-trade-in-services/>

Efinancemanagement.com, 2021, International Trade, Viewed on 10/08/2021 <https://efinancemanagement.com/international-financial-management/international-trade>

International.gc.ca, 2021, Trade policy 101, viewed on 11/07/2021, from <https://www.international.gc.ca/trade-commerce/trade_topics-domaines_commerce/policy_101_fondements_politique.aspx?lang=eng>

Fasken.com, 2021, Doing Business in Canada 2019, Viewed on 20/07/2021, from <https://www.fasken.com/en/knowledge/doing-business-canada/2019/06/international-trade-law>

Waikato.ac.nz, 2021, The Gravity Model, Viewed on 10/08/2021 <https://researchcommons.waikato.ac.nz/bitstream/handle/10289/8553/theimpactofimmigrationoninternationaltrade.pdf?sequence=1>

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