Sustainable Operations in the Tuna Industry
Dolphin safe canned Tuna is environmental safety regulation put forward by the government of the USA. This ensures that tuna fishes that are caught for the canned product do not create threats to the dolphins. A trade barrier is a factor that hinders the free trade between two countries of the world. This can be a great barrier to free trade since most of the other countries of the world cannot ensure the safety of the dolphins (Baird & Quastel, 2019). Therefore, sellers from the outside country do not qualify to sell their products in the USA and hence this definition works as a trade barrier in the free trade agreement.
The sustainability of the operation should be paramount for the economy as a whole. The dolphin-safe tuna products ensure the sustainable operation of the Tuna industry. In addition to that, the requirement also promotes marine environment protection which is important for long term economic operation (Yao et al. 2019). On the other hand, economic factors create decision making based on profit maximisation and that can be detrimental to the environment of the world. Therefore, in this case, ethical or environmental considerations should be paramount over the economic operations of the free trade agreement between the two countries.
The two main exchange rate regimes that are widely used throughout the country are fixed and floating exchange rates. While under the fixed exchange regime the monetary authority of the country fixes the value of the currency compared to the other currencies of the world, whereas under the floating exchange rate regime the exchange rate of the domestic currency depends on the demand and supply of the currency (Zarei, Ariff & Bhatti, 2019). Apart from that, a fixed exchange rate reduces the transaction cost of trade and hence increases the export demand, floating exchange rate regime brings stability to the balance of payment of the country.
The main reason for China to use a fixed exchange rate among all the large economies is that the economy depends a lot on export revenue. By using a fixed exchange rate regime, the monetary authority of the country can keep the value of the currency low compared to the major currencies of the world (Tong & Yang, 2021). Therefore, Chinese products become cheaper in the international market and hence this increases the demand. Since China thrives on the manufacturing sector of the country this pegged exchanger rate system that pegs the value of the Yuan at a low level ensures the sustainability of the manufacturing sector and the Chinese economy.
The North American free trade agreement makes the automobile industry of Canada dependent on the economy of the USA. In the year 2009 in the aftermath of the financial crisis in the USA, the sales of car manufacturers dropped significantly due to the fall in the demand (Kenno & Free, 2018). Therefore, Ontario and the federal government argued that by bailing out the car manufacturers the government can isolate the impact of the financial crisis on the economy of Canada. If the bailout was not undertaken the economy would have faced the heat of the financial crisis of 2007 with more severe intensity.
References
Baird, I. G., & Quastel, N. (2019). Dolphin-safe tuna from California to Thailand: Localisms in environmental certification of global commodity networks. Annals of the Association of American Geographers, 101(2), 337-355.
Kenno, S. A., & Free, C. (2018). Fostering and forcing uses of accounting: labour-management negotiations in the automotive crisis in Canada 2008–2009. Management Accounting Research, 39, 17-34.
Tong, B., & Yang, G. (2021). Interest rate fixation, excessive fluctuations and exchange rate management in China. Applied Economics, 53(26), 2993-3022.
Yao, X., Yasmeen, R., Li, Y., Hafeez, M., & Padda, I. U. H. (2019). Free trade agreements and environment for sustainable development: a gravity model analysis. Sustainability, 11(3), 597.
Zarei, A., Ariff, M., & Bhatti, M. I. (2019). The impact of exchange rates on stock market returns: new evidence from seven free-floating currencies. The European Journal of Finance, 25(14), 1277-1288.
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