4. Disadvantages of Canada
4.1 High labor cost
Although the labor cost in autos industry in Canada seem to be low compared to many countries such as Japan, Germany, USA, UK,… it is still relatively high compared to the world average and to 2 strongest competitor: China and especially Mexico.
Because of high labor cost, the price of Canada product is much higher than China and Mexico product. As a result it will affect Canada automobile industry because Canada will lose a number of customers from US market.
4.2 Government regulation:
Government regulation in the automobile industry directly affects the way a car is made, how the components of a car are designed, the safety features,… As a result, the production cost will slightly increase …show more content…
The idea is to “help open the internal markets for all three countries to greater amount of trades and investments.” (Rugman, A.M. and Collinson, S, 2015). However, the trade agreement has different effects on each country. For Canada, on the one hand, NAFTA not only increase the trade volume, FDI in Canada (“Canada’s foreign direct investment from the States increased by 243% between 1993 and 2013”), but also create a “freer movement of professionals and investors across the border” and new jobs for the country. (Blenman Joy, 2017). It has become convenient for Canada to access US market by eliminating all tariffs and reducing the regulation burden for trade so that the country can take the advantage to become the US’s number one trade partner. On the other hand, NAFTA has open the way for Canada’s trade partner, but also the strongest competitor, to enter and take over the US market with the advantages of cheap labor and the increase in productivity, quality and infrastructure. “The average Mexican will work up to 450 hours more than an American every year, earning less than a fifth of the pay”, said the Organisation for Economic Co-Operation and
4.1 High labor cost
Although the labor cost in autos industry in Canada seem to be low compared to many countries such as Japan, Germany, USA, UK,… it is still relatively high compared to the world average and to 2 strongest competitor: China and especially Mexico.
Because of high labor cost, the price of Canada product is much higher than China and Mexico product. As a result it will affect Canada automobile industry because Canada will lose a number of customers from US market.
4.2 Government regulation:
Government regulation in the automobile industry directly affects the way a car is made, how the components of a car are designed, the safety features,… As a result, the production cost will slightly increase …show more content…
The idea is to “help open the internal markets for all three countries to greater amount of trades and investments.” (Rugman, A.M. and Collinson, S, 2015). However, the trade agreement has different effects on each country. For Canada, on the one hand, NAFTA not only increase the trade volume, FDI in Canada (“Canada’s foreign direct investment from the States increased by 243% between 1993 and 2013”), but also create a “freer movement of professionals and investors across the border” and new jobs for the country. (Blenman Joy, 2017). It has become convenient for Canada to access US market by eliminating all tariffs and reducing the regulation burden for trade so that the country can take the advantage to become the US’s number one trade partner. On the other hand, NAFTA has open the way for Canada’s trade partner, but also the strongest competitor, to enter and take over the US market with the advantages of cheap labor and the increase in productivity, quality and infrastructure. “The average Mexican will work up to 450 hours more than an American every year, earning less than a fifth of the pay”, said the Organisation for Economic Co-Operation and