Presently the world is going through a developed channel of globalization where every country is coming together to strengthen the international economic integrity through global trade (Khan et al., 2018). This paper is being constructed to put light on the trade scenario between Ireland and Canada and possible policy implications to accelerate the same within 2030. The Ireland economy is considered to be one of the highly developed service-based economies, where the most developed sector is the tech industry and the country is rich in terms of inward FDI (Barry, 2019). On the other hand, Canada is another highly developed country that has mixed-market. This country also depends heavily on the service sector. Both of the countries are connected with each other with strong ties of bilateral trade flow and investment. In 2020, amidst the pandemic, the bilateral trade of commodities between these two countries was calculated to be $3.9 billion (international.gc.ca, 2022). The upcoming segments will present the idea of improving this bilateral trade relationship from Ireland’s perspective by the year 2030.
As this paper will be focusing on the future implication of the improvement of the trade relationship between these two countries, it is important to get an insight into where they stand at present when global trade is considered. Ireland and Canada both share historic relationships which go decades back. Presently, this commitment became strong due to increased economic integrity. Not only that but also Canada considers Ireland to be one of its strong allies in the EU. In the year 2020, Canada exported $672.3 million worth of commodities to Ireland, and the import was valued at $3.3 billion (international.gc.ca, 2022). Ireland imports industrial machinery, equipment, and parts from Canada and exports consumer goods. As it is already mentioned, both of the country’s GDP is dominated by their services sectors, the countries also shared their services through bilateral trade channels. Calculated from 2019, Ireland exported $3.1 billion worth of services to Canada and in exchange received $1.6 billion worth of service imports from Canada’s end (international.gc.ca, 2022).
As per the data retrieved from the 2022 march, there is a more than growing trade relationship between Ireland and Canada. The exports of Ireland to Canada were organic chemicals (€435 million), medical supplies (€28.8 million), beverages (€6.65 million), industrial equipment (€5.15 million), and miscellaneous items (€4.37 million). On the other hand, Ireland imported pharmaceutical commodities (€6.54 million), data processing units (€1.77 million), scientific apparatus (€4.61 million), electronic machines and equipment (€1.54 million) and miscellaneous items (€1.42 million) (oec.world, 2022).
From this stage, it can be understood that both the countries are very much dependent on each other in terms of economic integration and exchanging commodities. However, in this era f globalization and modernization, Ireland can improve its economic structure to strengthen this relationship further. While the discussion is focused on international trade, a conceptual background of theoretical underpinning becomes necessary. The prime two theories which will create a more in-depth analysis are absolute and comparative advantages. Absolute advantage means a country has the upper hand in the production of a commodity for which it uses lesser resources than the other countries. On the other hand, the comparative advantage means a country has a lesser opportunity cost in the production of a particular product compared to other countries (Liu & Gao, 2022). In the global market, all the countries trade the products in which they have a comparative advantage. Ireland has a comparative advantage in the production of milk, meat, grains, and fresh products. On the other hand, Canada has its comparative advantages in the products of food, live animal foods and natural resources like minerals. Thus, if Ireland focuses on supplying milk to Canada it will be benefitted because it is the product in which Canada does not possess a specialization. On the other hand, if Ireland can gain minerals from Canada then it will accelerate the domestic production of industrial goods. As per the statistics collected it can be seen that these commodities are not on the traded good list currently. Hence, by intensifying their trading, both the countries will be benefitted from these new adjustments and the trade relation will further strengthen.
Another positive aspect which the countries can focus is on their strengths regarding their production factors. Ireland has an upper hand in labour flexibility and its goods market (O’Sullivan et al., 2021). Moreover, the reason this country attracts more FDI is that it has a favourable business environment and feasible taxation system. On the other hand, Canada is known to be a diversified economy because of their mixed market operation. Along with it, the country as mentioned above is rich in its minerals and natural resource reserve. Furthermore, the banking sector in Canada is highly developed. Thus, Canada can attain labours from Ireland and on the other hand, Ireland can gain access to Canadian industries through FDI to get advanced banking facilities which will help them in developing their businesses in the foreign land and with the collaboration with the local entities, both the country gains economic advantages.
The next aspect which will help Ireland to gain a better trade relationship with Canada is the industrial clusters. As per the ISED report, there are five sectors in Canada in which the country enjoys an industry cluster, namely, digital technology, protein industry, advanced manufacturing, scale AI and ocean relation sectors (Komorowski, 2020). All of these industries are currently accelerating innovation and growth inside the domestic border of Canada. Thus, if Ireland can further improve its inward FDI structure as currently the country is already listed at the top in terms of FDI destination country, then, the outward FDI from Canada to Ireland will increase. Through MNCs, it will gain technology transfer and the country will have a higher amount of economic growth. On the other hand, in the case of Ireland the cluster exists in life science, food, IT, financial services and consumer service industries. Thus, Canada can also focus on these industries as the return will be higher. Hence, it is the responsibility of the respective governments to pitch their idea to each other as ultimately the goal is trade acceleration.
Canada being a facilitator of international trade has signed several trade agreements with other countries. These are, CUSMA, CPTPP, CETA, Canada-Chile FTA, CIFTA, CKFTA, CUFTA, Canada-UK Trade Continuity Agreement. On the other hand, Ireland is a direct member of the EU but Canada is not (Arnold et al., 2019). Thus, Ireland has partaken in all of the free trade agreements signed by the EU. With the countries Vietnam, Japan, Canada, Singapore and Mexico the Union has signed FTAs and Ireland also has abided by the same. However, market research had shown that the alliance between the EU and Canada (CETA) got developed through Ireland only. Thus, due to strictly political reasons, Canada will never want to hamper this relationship. From Ireland’s end, it can promote good opportunities so that Canada not only considers it as a channel to economic integration with the EU, but also the trade relationship between these two countries gets strong tied from the national perspective only. Currently, the countries are connected with the Comprehensive Economic Trade Agreement (CETA) which gives Canada barrier-free economic access to the EU and has helped in building trade between these countries (Mbengue & Schacherer, 2019). This ultimately benefits Ireland also but as their relationships over the years have become bilateral, the countries can propose to the UN for a new bilateral trade agreement to facilitate the free movement of commodities and factors.
When international trade is considered, one of the negative attributes of the same is tariff and non-tariff barriers. Usually, the government imposes these barriers not to restrict international trade but to safeguard the domestic small-scale industries. However, no matter what the purpose of these impositions is, it ultimately hampers trade only. As Ireland is a direct member of the EU, it has to abide by the commercial and trade integration policies imposed by the EU only. As the Union has proposed, low amounts of tariffs are imposed on the imports coming to the Union like customs procedures, administrative burden, import licencing, standards, labelling, packaging, unjustified trade defence measures and inefficient IPR protection (Sandkamp, 2020). If the same for Canada is to be considered then it can be seen that Canada has an open market economy that is heavily tilted towards international trade. Currently, there are a few trade barriers in the country namely, import licensing, anti-dumping, product bans, quarantine for agriculture-based commodities, restriction on technical commodities and others. The government is planning to reduce these barriers and at the WTO the country is proposing plans to facilitate trade that aligns with the obligations in the global market as set by WTO (Du, 2018). The best way to overcome the trade barrier is to sign trade agreements to facilitate free trade.
As the world is moving forward, the environment is heavily facing the aftermath of pollution and other harms. Both the countries considered in this paper are facing a range of environmental issues and there are measures the governments are taking to mitigate the same. In fact, Canada has taken up a low carbon future strategy which is quite accepted in the whole world. However, from the global perspective, Ireland is one of the countries which has the least corrective measures for environmental sustainability (Larissa et al., 2020). Henceforth, the government needs to keep this in mind if they want to increase the trade relationship with Canada. Moreover, regarding the immigration of the labour force, the Irish market is also facing certain challenges which can deteriorate the relationship between the countries because there is labour force mobility between Canada and Ireland.
In conclusion, to summarize it can be said that there are several areas of economic integration that Ireland can improve to strengthen the trade relationship with Canada. In all other aspects, Ireland has existing measures which with proper supervision and capital investment will be improved and the trade relationship will be benefitted. However, in terms of environmental sustainability and labour mobility, the country needs to take up urgent measures because these two segments can harm the cultural ancestry both the countries share with each other and eventually, that will influence the trade. The rest of the aspects just need continuous supervision and proper implication of policy measures.
References for International Trade
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