Question

In: Economics

Suppose members of the United States, Mexico, and Canada trade agreement (USMCA) agree to reduce imports...

Suppose members of the United States, Mexico, and Canada trade agreement (USMCA) agree to reduce imports of foreign oil and set a price floor for North American oil. Briefly describe the impact this might have for Alberta oil producers, and for Canadian oil consumers. (200 words)

Solutions

Expert Solution

USMCA is a free trade agreement between these three countries. Now USA is net exporter of oil And shale gas if the set price floor and keep it at lower level by using price floor against imported oil from other countries .

Then it may boost production in alberta oil field and may be good for canada as it may be cheaper than foreign imported oil . As canada can increases their forex reserve by export of this oil and USA also gain advantage of lower price .

It also boost their personal relationship in foreign policy . New job creation in Canada due to increased oil production etc and Canadian oil consumers also benifitted from lower prices of oil. And canada economy can boost up in energy sector and production of other goods also.canada dependent on other countries may reduces.

By using floor price USA and canada can Capture oil market in African and europian countries llike opec does in past year.

Thus it's beneficial for both countries.


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