Chapter 3 article notes, Sep 9-13.docx

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University of Waterloo
Accounting & Financial Management
AFM 131
Robert Sproule

S IX P OTENTIAL S TUMBLING R OAD B LOCKS a) Automobiles  Cars assembled in Canada … - Are mostly made with parts from USA & Mexico - Only 25% of parts are Canadian  EU proposes that if Canada assembles cars with Cdn parts - No tariffs on incoming cars  Rejected by Cdns - EU proposes a compromise: if USA-EU trade agreement happens, US parts put in Cdn carswill be considered “Canadian” b) Agriculture  Europe wants to enter w/ DAIRY & POULTRY - Cdn wants to ship more BEEF - However, Ireland and France are greatly opposed; rest of EU is OK c) Intellectual Property for Pharmaceutical Products  EU wants copyright protection for their brand name meds - Wants 2 year protection before generic companies start copying - Generic medicine cheaper than brand name  Canada compromises with 1 year protection d) Financial Services  EU wants more freedom for their banks - Experts believe current disputes are over capitalization rules, etc  EU and Cdn agree to Bavel II regulations - What is Bavel II regulations? - Tight qualifications to be considered as a T1 Capital (which deals with common shares of banks) - No compromise of rules b/c of current financial situation(s) e) “Provincial” Procurement  Canada will be forced to allow foreign companies to undertake projects - For transit, infrastructure, etc - One of the most difficult issues - Provinces want to know how it will affect them first before agreeing  If Canada agrees to EU’s pharmaceutical proposal, - Provinces believe they will pay more for yearly health-care costs f) Canada Investment Act  Europe wants exemption from “NET-BENEFIT TEST” - What is it? - Investors who wish to invest in Canada must PROVE that their transactions will be useful and of “NET BENEFIT” to Canada - Ex) Will Canadians participate? What is the effect of this investment on Canada’s economy? Will it bring competition? Is it productive/efficient/technologically advanced/innovati
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