Globalization

Trade Agreements

&

Organizations

Yesterday’s learning goals…

• Rationalization

• Competitive Advantage

• Absolute Advantage

• Opportunity Cost

• Comparitive Advantage

Our learning goals for today…

• Globalization

• Trade Agreements

• Trade Organizations

• Over the past century, the power, size, and reach of corporations have grown enormously.

• These companies conduct business on an international scale.

• Globalization is the process whereby national economies and cultures have become integrated.

Global integration through..

• New global communication technologies

• foreign investment

• international trade

• migration

• new forms of transportation

• the flow of money

Globalization

• Is the movement of goods, services, technology, investment, ideas, and people throughout the world.

Advantages

• Outsourcing

• Lower prices

• Improved human rights

• Increased productivity

• Innovation

• Better jobs

• Increased capital flow

Disadvantages

• Lost Canadian Jobs• Loss of Canadian productivity• Exploitation of cheap labour• Increased pollution• Unhealthy products• Spread of disease• Increase in the income gap• Influence of MNC on governments.

Globalization: Trade Agreements

• Trade agreements are written ‘agreements’ between nations establishing terms of trade, eliminating trade barriers, and encouraging foreign investment.

Trade Agreements

• NAFTA• European Union

NAFTA

• North American Free Trade Agreement

• Sets rules surrounding the movement of goods, services, and investments across North America.

• Which countries does that include?

Advantages of NAFTA

• Eliminates tariffs and other trade barriers.• Protects copyright and patents.• Promotes competition between participating

countries.• Access to raw materials, talent, technology

across all of North America, not just in their own country.

• Since NAFTA’s inception, trade has triple between the three partnerst.

• (Approx. $300 billion to over $900 billion)

Disadvantages of Nafta

• Labour costs are lower in Mexico, so a lot of manufacturing jobs have moved to Mexico.

• With tariffs on corn and soya beans being lifted, it is too hard for Mexican farmers to compete with the U.S.

Tariff: $2 ??

• Price of Corn in Mexico: $5

• Price of Corn imported from U.S.A.: $4

European Union

• Imagine arranging a shipment of goods from Windsor to Montreal.– Take the 401; No big

deal.

• How about travelling the same distance in Europe?– You travel through Hungary, Slovakia, Czech

Republic, Germany, and the Netherlands.– Four Border Crossings! (duties & tariffs at each!)– Five different languages!– Five sets of transportation documents!– Five different currencies!

European Union• The formation of the European Union has

removed most of these obstacles!!

European Union Countries

• There are 27 member states of the European Union.

• It is a trade agreement including almost half a billion people.

• It has its own flag

Purpose

• The purpose of the EU is promote economic growth, peace, government co-operation, and ensure that its population can prosper.

The Euro

• One of the major accomplishments of the EU is its implementation of a common currency – the Euro.

Canada & The European Union

• The EU is Canada’s second largest export trading partner after the U.S.

• Lately, in the news, the European Union was voting on whether or not to accept oil from Canada’s oil sands. (They were voting on whether it was too ‘dirty’ a supply of oil or not.)

Trade Organizations

• Agreements are treaties between nations.

• Trade Organizations are groups of nations helping to liberalize trade (make it easier).

WTO

• World Trade Organization

• 153 countries– negotiates trade agreements– has a set of rules– settles disputes– is extremely important for Canada as we have

a relatively small economy and without it, our voice on the international stage could be lost.

APEC• Asia Pacific Co-operation

• 21 member countries

• 54% of the world’s GDP

• Decreases tariffs and trade barriers between countries in the APEC.

OPECOrganization of Petroleum Exporting Countries (1960)

G8

• ‘Group of Eight’

• France, U.S., Britain, Italy, Germany, Japan, EU, Canada, and Russia

• The major economies of the world.

G20

• Group of Twenty

• Reflects the changing times and influence of other countries.

• Includes Brazil, India, China

• These 20 countries encompass 90% of the world’s economic activity.

World Bank

• 186 member countries

• provides monetary and technical support for developing countries

• provides loans and grants to poor countries to assist with education, health, farming, the environment, and other economic concerns– There are criticisms as well:

• They put stipulations on loans, change economies, and pressure governments and producers.

International Monetary Fund

• 186 countries

• promotes financial stability

• lends money

• provides expertise to governments

• warns governments of potential financial problems.

Activity• Create a world map (with a legend) that shows the countries in:

– The EU– G8– G20

* Some countries will be in all three, so you will need a legend showing:

1. EU2. G83. G204. EU & G85. EU & G206. EU & G8 & G20

Also, label each country with its two digit country code.eg. Canada = CA

http://www.uspto.gov/patft/help/helpctry.htm

ReviewOur test (open book & open computer) will cover:

Trade BalanceThe WTOCorporationsCodes of EthicsCSRSRIEthical Imperialism & Cultural RelativismStocks and ROINGOs and Micro CreditCapitalism, Communism, & the Mixed EconomyRationalization, Competitive/Absolute/Comparitive Advantage