Business Economics
The term TPP is an acronym form of the Trans-Pacific Partnership that is a trade agreement between the various countries. This agreement is developed between those 12 countries that are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States (US) and Vietnam. In the year 2017, US tool its membership return due to some reasons. This trade agreement is developed with the aim of conducting the free movement of the good and service among the participated countries. At the current time, TPP is one of the well known free trade deal that is presented between the 11 countries. The main aim of this pact is to develop the economic conditions of the member countries. TPP also has expectation that in the future it will be success to add more the countries as the member of the TPP.
But, after the name take by the US from TPP, it is found the remaining countries has redeveloped the some policies. The aim of them is to conduct the trade agreement with the full effectiveness without the US member ship. But, it is also found that the Canadian prime minister is not agreed on the new developed term and condition on the TPP. In this way, this report conducts the economic analysis of the effects of the TPP in the both context without Canada and with Canada. This report includes the Impact on Canadian consumers, Impact on Canadian producers in the both contexts such as with Canada and without Canada. Furthermore, it is also that companies should also the discussion on the 10 non Canadian customer and producers. Elasticity of the demand and supply curve in the selected industry or group of the related industry is also developed. At the same time, this report also includes the discussion on the effect of a tariff without TPP for Australia.
Economic analysis of the effects of TPP when partnership goes ahead with Canada
For economic analysis, an automobile industry is selected in order to determine the impact or effect of TPP on Canadian consumers and producers:
The impact of TPP new policies on Canadian consumers will provide the benefit to the automobile makers as well as consumers too. The competitive equity is one aspect that is important for automobile manufacturers because it provides the benefit to the consumers and shows limited impact on Canadian production facilities. In the research study of Weston (2011) it is clearly stated that development of new TPP policies has faced various criticism due to secretive provision and procedure which creates negative impact on the Canadian automobile industry. But, at the same time, TPP policies and procedure somewhere provide opportunities to the automobile industry, consumers, exporters and small businesses. The impact on consumer of TPP is positive because there purchasing power will get increase due to reduction in wide range of tariff. However, this will lead more choice to the consumers and at low prices for consumer goods.
On the other hand, the impact of TPP is also analyzed on producers of automobile industry. For Canadian producer, international trade has become more critical because this provides them with different opportunities to develop and growth their business as well as helps to contribute towards growth and prosperity in the economy (Head, 2015). The impact of TPP on producer is negative to some extent because this will impose more tariffs on automobile makers and also this tariff will create substantial impact on the trade flow. In addition to this, the TPP policies and procedure are also profitable for the automobile industry, exporters, consumers, and small businesses by providing new opportunities.
Impact on consumers of the 10 non-Canadian parties to the TPP
The new policies of TPP are highly beneficial for the consumers of 10 non-Canadian parties because it will increase the level of competition among the manufacture of automobile. In this competition, the price of the products has to be reduced by producer and consumer will get the best quality products at lower price (Thow, et al., 2015). The consumers get the more positive impact because the purchasing power of the consumer is increased. On the other hand, the TPP also provided other products easily to the customer by increasing the importing and exporting. But, some of these products are costly for the customer due to different tax policies in the importing and exporting.
Impact on producers of the 10 non-Canadian parties to the TPP
The TPP agreements are highly impacted on the different producer of the 10 non-Canadian parties because the trade agreement is under the negotiation. On the study of Du (2015) it is analyzed that the producer of the automobile was expecting double their exporting but it was little bit high (Hamilton, 2014). Additionally, it is found that the production and consumption of milk and eggs are also increased. It shows that the economy is highly affected due to the TPP and the producers of the 10 different non-Canadian pasties. On the other side, it is identified that it has increased the level of competition among the 10 different non-Canadian pasties due to importing and exporting the same products.
Elasticity of the demand and supply curve in the Automobile industry
The TPP new policies also impacted on consumers and producers because it forwards the trade liberalization. It is analyzed that the foreign supply is perfectly elastic so it did not affected on the change in the quantity demand (Mercurio, 2014). The TPP partnership with Canada increased the demand of the automobile products and there are a number of producer of same kind of product. The quality of brand affected on the demand so this economic situation provided the less elastic demand. On the other side, the supply of the product is much high so the supply curve will severely growth in upward slop. The sensitivity of the demand and supply was decreased due to TPP agreements. There are number of automobile products available for the consumers both branded and low quality products so the consumer can purchase according to the affordability.
The effect of a tariff without TPP for Australia
The TPP also affected to the economy of the Australia, but in the same concern it was not tariff with the Australia (Lu, 2015). Without TPP for Australia, the tariff can be reduced because there are many firms in the Australia that helps to increase the level of competition in the global market. At the same time, the online sources of business are also provided by the Australian organizations that contribute in the TPP. So, it can be said that the Australia is very effective country that can affect the TPP, if was not included in TPP. Most of the industries of the Australia are affected by this agreement and one of the most important industries is agriculture industry. But the automobile industry is also affected to the global economy.
Consequences on efficiency at the global level
At the global level, the TPP is very effective because it opened the market for different sectors that are necessary to increase the economic situation of the partner’s countries. The automobile industry gets the different benefits at the global level, and they also get the benefits of highly skilled labor (Weston, 2011). In addition to this, the TPP is very efficient for the industry because the organizations also have different capital benefits as well as a number of customers is also available of the producers. It is determined that after the TPP agreement 26 percent of global trade is provided by the partner countries that are highly effective for the global economy. This area is bigger than NAFTA and there is an easy step to increase the trade in the international market. After the TPP, the export and economic growth boosted as well as the job opportunities are also increase in the all industries, mostly in the automobile industry.
Economic analysis of the effects of the TPP without Canada
It is an interesting aspect to analyze the economic impact TPP without the Canada. It can have a great impact on the Canadian customer and producers as well other countries customers and producers. It is because Canada plays a significant role in the TPP. Canada jointed TPP in the 2010 and become the member of TPP in the year 2012. Canada is approx is half of TPP participants which has aim to improve the economic conditions of the participated countries.
In the case of the discontinue agreement, the Canadian customer can be affected. In this, it is possible that customer can take the advantage of the low price of the luxury cars. Canada imports the luxury cars from the various countries such as Japan, Malaysia and Mexico. These countries have the significant share in the automobile industry. The Canadian customer who have the desire of the luxury cars, the also purchases the car from these countries. TPP allows the Canadian customer takes the advantage of low price when the make the decision of the car purchasing. TPP partnership provides the redemption on the various kinds of the tax and cost. But, after discontinue the partnership or membership with the TPP, the Canadian customers have to pay the high cost of the Luxury cars that can affect the desire of the purchasing the luxury care. Its impact can also be seen that due to the high cost of the foreign brands, the Canadian customer can move for the local brands in the car (Dyster and Meredith, 2012). However, it can bind the choice of the customers. Therefore, it can be said that the partnership of Canada with the TPP can have the negative impact on the economic condition of the Canadian customers.
In the same concern of Canadian customers, the Canadian producers in the automobile industry can also be affected the prime minister decision without the TPP. Its impact can be seen in the both context because TPP’s policies allows the Canadian producers to import the significant or necessary machine at the lowest price. It also make able the Canadian customers to takes the advantage of the lower wages in the Peru and Vietnam. But, in the case of the discontinue agreement with the TPP can be recognized the negative for Canadian producers. It will not allow Canadian producers to deal with TPP member at the lowest price. In this case, Canada will pay the various kinds of the tax and duties in the import of the machineries and various parts of the cars. Furthermore, it is also found that in some conditions, Canadian producers can get the benefit of the over the partnership with the TPP (Boyes and Melvin, 2016). It can increase the demand of the local producers in the Canadian market because customer will avoid to buy from the foreign market. It is because the discontinue agreement can raise the cost of the import.
Impact on consumers of the 10 non-Canadian parties to the TPP
The decision of Canada to not conduct the partnership with further with TPP can also influence the consumers of the remaining countries. The current business environment is very competitive and customers want to purchase the products at the cheapest price. In this, it is found that if the Canada decides to not become the part of the TPP than customers of the remaining countries can take the benefit low price of the products and services that are important by the Canada. At the same time, in the context of the automobile industry, it is found that Canada has much share in this industry. Due to this, it can be said that in the context of the automobile industry, the decision of the Canada to leave the membership of the TPP will affect the remaining countries customers. It is because in the total export of Canada, the vehicles export has 16.5% share that;s value is $64.3 billion. The decision of the Canadian prime minister can discourage the 10 non-Canadian parties to the TPP (Brouse et al., 2015).
Impact on producers of the 10 non-Canadian parties to the TPP
Moreover, it is also found that the decision of Canada to leave the membership of TPP can also affect the producers of the ten non Canadian parties of TPP. In this, as Canadian producers purchase the row material from the out of countries likes as other counties also purchases the goods and service from Canada. If, prime minister decides to leave the membership of TPP then it can affect the opportunities of the ten non Canadian parties of TPP to buy the products and machine at the cheapest price from Canada. It can increase the cost of these producers that will lead the increase in the price. At the same time, it is also found that as Canada is well known in the export of the vehicles as it can influence the producers in the positive manner. It is because if Canada break the deal with the TPP then non-Canadian customer will not able to get the benefit of the lowest price (Sinclair,and Trew, 2016) . Hence, they will move towards the local brands in the vehicles. It will provide the financial benefit to producers of the 10 non-Canadian parties to the TPP.
Elasticity of the demand and supply curve in the Automobile industry
The concept of the economic is totally depended on the demand and supply of the product. In the economic, the each financial and economic decision can affect the demand and supply of the goods. In order to understand the concept of the demand and supply, the help of the demand and supply curve can be taken. It is helpful to understand the flow of the demand and supply market. At the same time, it is also helpful to determine the impact of the various factors in the in the change in the demand and supply of the product. However, the main impact in the change in the demand and supply is seen of the price. Typically, the change in the price of the product becomes the reason in the change in the demand and supply curve. In the context of the automobile, the decision of the Canadian prime minister can affect the demand and supply curve. In this, if the price of the car or vehicles increase then the demand will decline and supply will increase (Muntaner and Mahabir, 2017). In this condition, the demand curve will shift left and supply will shift right. On the other hand, if the price of car or vehicle decreases then demand curve will shift right and supply curve will shift right.
The effect of a tariff without TPP for Australia
The role of the Australia is also effective in the TPP. It is because Australia plays a significant role in the import and export goods and services between the members of TPP. In the total export of the Australia, 29.1% export is of mineral fuels. At the same time, it is also found that Australia is also major importer of the various goods and service. The Australian customer likes to buy the luxury car from the Japan, Canada and Mexico. Hence, It can be said that Traiff without can also affect the demand and supply in the automobile industry. Along with this, it is also found that Australian economic is one the economic that is growing well in the market. Hence, it can be said that impact of tariff without TPP can be significant for the remaining members (Ciuriak et al., 2016).
Consequences on efficiency at the global level
However, the decision of the Canadian prime minister can not affect the efficiency of the each county in the world. But, at the same time, it is analyzed that the decision of the prime minister will affect the efficiency at the global level. It is because Canada is a well developed country in the work and its economic will have impact on the efficiency at the global level. It can affect the shares of the Canadian companies the various counties stock market that influence the economy at the global level.
From the above discussion, it can be determined that that the trend of developing the free trade agreement between the nation at the great extent. In the various countries are doing the cooperative action. In this, it is also found that TPP is also developed for the economic growth the participant members. It is a kind of the free trade agreement between the countries. Furthermore, it can also be summarized that Canadian prime minister decision for the agreement of the TPP policy can affect the customer and producers at the great extent including the Canadian and non-Canadian. It can also affect the demand and supply of the Automobile industry.
2.1 Consistent with the theory of efficiency wages.
The theory of the efficiency wage shows that it is a kind of wages that is able to motivate the workers for perform well in the organization. it increases the productivity of the workers as well company. It is extent of wages that workers expect from the company against their efforts. By the help of paying the efficiency wages company can retain the employee for the long time (Hamilton, 2014). In the context of the above given article, it is found that the theory of the efficiency wages is consistent with the above article. It is because the above article is also discussing the benefit of the efficiency wages at the work place. At the same time, it is also discussing the needs of the efficiency wages at the worker place.
2.2 Disadvantages and problems associated with a binding minimum wage
The application of the minimum wages at the work place is a kind of system that is associated with the legal system of the government to paying the wages to the workers. It can becomes the cause of the unemployment because after the application of the minimum wages the competition increases among the employees and workers. At the same time, company also wants to hire the skilled employees in the determined wages that leads to unemployment among the less skilled persons. It can also increase the back market because a minimum wages leads the number of people in the black market (Du, 2015). In this case, companies can ignore the legal minimum wages. In the application of the minimum wages, small firms can go out of the market and they can loss their effectiveness in the competition.
2.3 Recommendations to new business setups in Australia in regard to dealing with Australian minimum wage
On the basis of the benefit of the minimum wages at the workplace, it can be recommended that the new business should follow the concept of the minimum wages at the workplace because it can provide the various kinds of the advantage to the company. At the same time, it should also follow the each section and law in the relevance of the minimum wages. New business should also set different benefits for the employees with completing the needs of the minimum wages (Boyes and Melvin, 2016). It can be helpful for the organization reduce the employee turnover rate. In the case of the news business, a company should also consultant with the legal advisor on the concept of the minimum wages. New business also analysis, the negative impact on the business if it does not follow the regulation of the minimum wages in the Australia.
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Thow, A.M., Snowdon, W., Labonté, R., Gleeson, D., Stuckler, D., Hattersley, L., Schram, A., Kay, A. and Friel, S., (2015) Will the next generation of preferential trade and investment agreements undermine prevention of noncommunicable diseases? A prospective policy analysis of the Trans Pacific Partnership Agreement. Health Policy, 119(1), pp.88-96.
Weston, G., (2011) ANALYSIS: Pacific trade deal would impact Canadian consumers. CBC News. [Online] Available at: http://www.cbc.ca/news/politics/analysis-pacific-trade-deal-would-impact-canadian-consumers-1.1123763 (Accessed: 10th February, 2018).
