Canada Risk Analysis Essay Example | Topics and Well Written Essays - 1250 words

Canada Risk Analysis - Essay Example In the last decade party leaders have sought to remedy this situation. To remain an attractive partner in multilateral economic arrangements, Canada must struggle to stay competitive (Zimmerman, 2008). Legal environment is favorable for international companies, thus Canada is a US oriented companies with strong cultural and economic relations with the USA partners. Among the major federated states, Canada is the most loosely organized. Constitutionally, the provinces have jurisdiction over matters related to education, culture, and natural resources, and so they have a voice in foreign policies affecting these concerns. Because Canada lacks the equivalent of the "interstate commerce" provision of the U.S. Constitution, even trade between the provinces is not entirely free of encumbrances; thus in trade matters, also, Ottawa is somewhat fettered in dealing with other governments. Furthermore, because Canada lacks the equivalent of the principle that treaties override other domestic legislation (embodied in the U.S. Supreme Court decision Missouri vs. Holland, 1920) Ottawa's diplomatic authority is weak (Zimmerman, 2008). Exchange and repatriation of funds risks In Canada there is no currency restrictions placed on the repatriation of funds. Thus, in some cases, the repatriation may have tax consequences. In Canada, exchange rates are stable, so a foreign company will avoid these risks. Competitive risk assessment In Canada, the international and domestic competition is fierce. Canada has gained from the succession of tariff-cutting rounds, but with its fairly high tariffs has had to make large concessions in return. Furthermore it can be the subject of actions taken against it for allegedly breaking a GATT rule. GATT has no sanctions, but an injured state can impose countervailing duties in retaliation for the offense or take some other action for compensation if a specially-appointed panel rules that a GATT provision has been violated (Zimmerman, 2008). Taxation and double taxation risks The main legal regulations for international companies are Tax rate for resident companies and tax rate on long-term capital gains. VAT rates are based on standardized procedures: 'there is a Goods and Services sales tax (GST) which rate varies depending on the states between 6 and 14%" (FITA 2008). In some cases the threat has been enough to induce the Canadian government to change its regulation. Although Canadians share the U.S. preference for the freest possible global trading system, and indeed cooperate with the United States in GATT and elsewhere in pressing for policies favoring openness, Canada's much smaller economy is especially vulnerable to U.S. moves. Canada's trade is overwhelmingly with the United States; its imports from and its exports to the United States amount to well over 70 percent of the respective totals ()FITA 2008. Market Risks (4 Ps) Canada is also the largest foreign market for U.S. trade, even though U.S. exports to Canada account for no more than 25 percent of total U.S. exports. In fact, the two economies are so integrated that if one country tries to retaliate for a perceived trade injury to some segment, another segment is likely to be harmed in return. Product - Canada is the