International Trade

Advantages and Disadvantages

Reasons for International Trade Sell something we don’t need or have

made for trade and buy something that we need

Many benefits Trade creates jobs, attracts investment,

attracts new technology and materials, and offers Canadian a wider choice in products and services

Reasons for International Trade Range of choice provides more

competition in the marketplace Result – competitive pricing, technological

advances, improved services – including the education and training of Canadian employees

AdvantagesMeeting our Needs Allows Canadians to have access to many

goods that we are unable to produce ourselves (pineapple, motor vehicles….)

Trading Partners get something they need by trading something that they do not need

AdvantagesJob Creation Foreign businesses buy Canadian products and

services, which leads to more jobs for Canadians Exports are critical to the Canadian economy One out of three Canadian jobs depends on

exports More than 40% of everything Canada produces is

exported (50% for Ontario) Every $1 billion in exports means over 6000 jobs

for Canadian

AdvantagesAttracting Investment Investment follows trade Many foreign companies, when demand is

proven through trade, will invest in an office, factory or distribution warehouse in Canada to simplify their trade and reduce costs

This investment creates other jobs in construction, sales and office management

AdvantagesNew Technology and Material Development of new technology promotes

competitiveness and profitability Newly developed technology sold through

patents to foreign companies – collecting annual fees, royalty percentage or a one-time payment, outlined very specifically in a contract

AdvantagesNew Technology and Material E.g. Reliability Software, Asset

performance Management Software – Capital Intensive Industries – metals, mining, steel, utilities, power generation, oil and gas

Sell software maintenance and support, and services (professional , implementation, technical services)

AdvantagesDiverse Products and Services Foreign trade opens up the world as a market,

delivering a wide range of foods, high fashions, and new inventions to the Canadian market

Foreign travel, banking, consultation and other services are also available to the Canadian consumer

Businesses must consider that their competition for similar products and services is no longer just in the same city but anywhere in the world.

Disadvantages

Support of Non-Democratic Systems Great hardship on people who have no

choice but to grow a profitable cash crop (e.g. coffee beans)

Local farmers wishes to grow food for their families are ignored

Disadvantages

Cultural Identity Issues Culture is “exported” with the products

sold internationally Symbols of American culture include

products like Coca-Cola, McDonald’s and Nike.

DisadvantagesSocial Welfare Issues Maintaining safety standards, minimum

wages, worker’s compensation, and health benefits cost Canadian businesses and Canadian taxpayers a great deal of money

Countries that do not maintain these high standards can make products less expensively

DisadvantagesEnvironmental Issues Canada has highly regulated environmental

protection laws Many businesses may chose to do business

elsewhere if the pollution controls, recycling laws and emission controls are not too stringent or expensive for them to meet

DisadvantagesPolitical Issues Ware and strife often occur because of

natural resources. Thousands of people have been killed for

control of oil, others for control of the diamond trade or even farmland.

Trade in precious commodities can cause political alliances that do not help the local people

Your task (select one): Research a recent

environmental issue that directly affected a Canadian business that sells its products internationally

Give a specific example of a cultural message carried by three different American-made products.

Discuss the impact and whether you believe it is a positive or negative influence