Getting today’s GLOBAL “ECONOMY” -What is it? -What about Canada? (NAFTA) -What about international agreements & organizations? (FTAA, WTO, La Francophonie) -What do you think so far?

What is the economy?

How do countries do it? Protectionism Tariffs

How else do they do it? Liberalization Free trade

Free Trade Free Trade- trade between countries with relatively few restrictions Trade liberalization is the process of reducing barriers to trade and was essentially started with the Bretton Woods Agreement. Many free trade agreements were made and signed as the world began to pull together to recover from the financial devastation of war.

Free Trade Over the last 20 years, more and more countries are opening up their borders. Of 193 nations worldwide, 190 have signed at least one free trade agreement. (examine map and website)

Free Trade Agreements (check your country)

Free Trade These agreements set up trading blocs (a group of countries working together to give one another better trading terms) They often do this by reducing or eliminating tariffs (a tax placed on international goods so that they are unable to compete with the prices of domestic goods)

Trading Blocs

International Economic Organizations As people continue to argue whether or not the World Bank, the IMF and trade liberalization are beneficial for our world and its societies, other organizations continue to emerge.

World Trade Organization The World Trade Organization was established in 1995, but its roots go back to the Bretton Woods Agreement and the GATT (General Agreement on Tariffs and Trades) The basic premise of the GATT, and later the WTO, is that free trade encourages peaceful relations. So the WTO works to improve trade relations among the countries of the world, especially by removing tariffs and other barriers to trade.

World Trade Organization Membership in the WTO is voluntary but most countries in the world have signed on. This means they must follow the (60+) trade rules established by the WTO. China opted out of the WTO when it was first formed but found it very difficult to do business with the member countries from the outside. In 2000, China joined the WTO. Its economy has grown rapidly ever since.

Point of Interest!! The WTO gives developing (poorer) nations special treatment, including: extra time to fulfill commitments more trading opportunities than the other countries clauses in agreements saying that decisions must be made in the best interest of these nations additional help in fulfilling commitments (money, resources, etc)

A-B Partner Talk: Canada-U.S. Trade Relations The U.S. and Canada enjoy an economic partnership unique in the world. The two nations share the world's largest and most comprehensive trading relationship, which supports millions of jobs in each country. In 2007, total trade between the two countries exceeded $560 billion. (Approximately $1.5 billion worth of goods per day) Canada is the leading export market for 36 of the 50 U.S. States, and ranked in the top three for another 10 States.

A-B Partner Talk: Canada-U.S. Trade Relations A-B Partner Talk The United States is by far our biggest trading partner. How might this affect our relationship with them?

A-B Partner Talk: Canada-U.S. Trade Relations Our trade relationship with the United States affects us (negatively/positively) for the following reasons:

Freer Trade In Canada FTA In 1989, Canada entered into a free trade agreement with the United States. This meant that the two countries could trade without tariffs. Like Canada, Mexico, also relies on the United States for most of its trade. And Canada began seeking access to more markets and trade items. So...

Freer Trade In Canada NAFTA In 1994, Canada signed the North American Free Trade Agreement with the United States and Mexico. How might this benefit our economy? How might it hurt it?

Different Perspectives on NAFTA “IT WILL BENEFIT OUR ECONOMY” At the time that NAFTA was being drafted, Canada was making $3 billion from trading with Mexico and $180 billion through trade with the U.S. Many Canadians and Canadian political figures felt that, if we didn’t sign on, we would lose valuable business with the United States (they would access more trade items from Mexico). They also felt it was a way for us to compete in the global market (Europe and Asia had similar agreements)

Different Perspectives on NAFTA “IT WILL HURT OUR ECONOMY” Many were opposed to Canada signing this agreement because – a lot of Mexican and American workers did not belong to unions. – labour laws were not nearly as strict south of our border This meant that employers could pay their workers less money and they may not have to follow worker safety and environmental protection laws. Therefore, their products could made at a lower cost be sold for a lower price. What would this mean for Canadian goods?

Free Trade Area of the Americas Once North America signed on to NAFTA, the United States wanted to expand trade even further to create a trading bloc with South and Central America. (except Cuba, of course) The 34 countries have met in a series of summits, but some of the less developed nations (Brazil, Bolivia, Venezuela, Ecuador, Honduras, Nicaragua) still oppose the FTAA.

Opposition to the FTAA These countries have an historical distrust for the United States and feel that the FTAA is yet another step to them claiming political and economic control of Latin America. (TNCs) Some North Americans also oppose the FTAA as they feel they will lose jobs to the less-developed countries with fewer labour laws and cheaper production. (Maquiladora) Because of the lack of enthusiasm for the FTAA, several countries in the western hemisphere have signed smaller trade agreements with each other. Voices 201

Growth of Overall World Trade How are international trade and world GDP linked?

Expanding & Growing The world has experienced rapid growth since 1990 because of the end of the Cold War and the increase in capitalism. China’s membership to the WTO has also enhanced world trade substantially since Economic globalization continues to expand today. One factor related to this is the development of international trade agreements and organizations.

La Francophonie La Francophonie is a global organization that works to protect French language and culture, but it has also helped to promote economic development in its member countries.

La Francophonie Canada is one of the original members of La Francophonie and it is also one of the richest. As a result, it has taken on a leadership role in helping the less-developed Francophone countries become more economically integrated in the world.

Do Trade Agreements Benefit All People? Over the years, trade agreements have resulted in the expansion of trade...but is this a good thing? Does it benefit all people? PROS Export manufacturing creates good jobs and incomes. There is a close relationship between economic growth and trade.

Do Trade Agreements Benefit All People? CONS Trade does not effect countries equally Ex: -From , trade tripled in North America ($300 billion to $1 trillion) and the GDP nearly doubled ($6000-$10 200/person) - In Sub-Saharan Africa, trade grew from $20 billion to $95 billion and the GDP increased from $450 to $620/person)

Top exporting countries (U.S., Japan, France) trade 100 times more than the least developed countries (Ethiopia, Cambodia, Bangladesh)

1.How might increased trade help least developed countries? 1.What might be some negative impacts of increased trade for these countries?

Do Trade Agreements Benefit All People? Countries, both rich and poor, want more access to more markets: – Developed countries want to sell more manufactured goods to least developed countries – Less-developed countries want to sell more non- manufactured goods (grain, agricultural products) to everyone. – less-developed countries have limited access to manufactured goods and the machines to manufacture these goods GC 203