Unit 4 Canada’s Foreign Trade Miss Warner Geography 20F

Last Class Industry & Manufacturing: What are the two types of manufacturing that occurs in Canada? How does manufacturing help our country as well as our global economy? Is manufacturing equally beneficial for all provinces and territories across Canada? Why?

Canada’s Foreign Trade In groups of 2-4, name 5-10 everyday items that are products of trade. Answer the following questions: Why does Canada Trade with other nations? Would Canada or North America survive if we were to suddenly stop trading? What are some negative impacts of Trading?

Canada & Trade Canada Imports and Exports a large number of products, all of which fuel our economy, industries, consumerism & our natural resource development The products we import are items we do not have available to us naturally Our exports are the items we have an abundance of here naturally.

Canada & Trade The relationship between a countries Imports and Exports is important to its economic well being. Trade Surplus: when the number of exports exceeds the number of imports Ie) more money is brought in then we spent Trade Deficit: When the number of imports exceeds the number of exports. Ie) more money is spent than is brought in

Be ready to explain your ideas & reasoning to the class Canada & Trade With your partner take 2-3 minutes to think about the following question Does Canada produces a Trade Surplus or a Trade Deficit annually? Be ready to explain your ideas & reasoning to the class

Canada: 2013

Canada & It’s Trading Partners Who does Canada Trade with the most? The USA far exceeds all other countries in the $ amount for both imports and exports.

Canadian Imports Net Imports & Net Exports refer to the difference between how much we bring in of a particular product compared to how much we send out of that product. Main Idea of Net Import & Export Excess of a certain product  Export Shortage of a certain product  Import

What trends do we notice by looking at this chart of Canada’s Net Imports & Exports

October 8, 2013 OTTAWA — Canada’s trade deficit in August climbed to $1.31 billion as imports grew by 2.1% to set a new record and exports rose by 1.8%, Statistics Canada said on Tuesday. The deficit — the 20th in a row — exceeded analysts’ forecast of a $700 million shortfall. Statscan revised July’s deficit to $1.19 billion from an initial $931 million. Imports hit $41.08 billion in August on higher shipments of energy products, aircraft and motor vehicles as volumes rose 1.2% and prices increased by 0.9%. The previous high was the $40.89 billion recorded in April 2013.

Canada: 2013

Canada’s Major Net Imports Our major Net Imports fall into 4 categories High-Technology Products Includes items as equipment for factories, mines, forestry industry etc. Computers, TVs, Video games and CD players Only a few countries in the world produce such item USA, Germany, Japan, Taiwan & South Korea

Canada’s Major Net Imports 2. Motor Vehicle Parts Canada makes most of the Cars sold to the USA by all of the North American Auto dealers. Assembly plants receive car parts from the USA, Mexcio, Japan & other countries 3. Goods produced in warmer climates Our northern climate prevents us from producing items that need a warm climate to grow. Citrus fruits, fresh vegetables, sugar, coffee, tea, chocolate, spices & exotic wood species.

Canada’s Major Net Imports 4. Low-cost goods Some items can be produced for less in other countries Aka. it cost us less to import them then make them Clothing, Footwear, plastic etc. Made in China, India, Brazil, Thailand & Mexico

Canada’s Major Net Exports Our major net exports fall into 3 categories Products based on Natural Resources We sell products from forests, fields, mines & water Mostly energy products such as fossil fuels make their way to other countries.

Canada’s Major Net Exports 2. Vehicles We export millions of dollars in vehicles every year mainly from Southern Ontario’s Car Manufacturing hub. The export of these vehicles is sensitive to Trade Agreements with other countries & the presence of Tariffs. Tariffs: tax that is paid when a product moved from on country to another 3. Specialized Manufactured Goods Other specialized goods such as aircrafts, agricultural machinery etc.

Importance of Exports Why must Canada Export? 1. To pay for the things we import We import necessary things as well as luxuries. We need to be able to pay for these “wants” 2. To keep our economy healthy 50% of the goods & services Canada produces is exported 3. To lower the prices of Canadian-goods for Canadians The cost per unit is lower if we make 1 million pairs compared to if we make 1,000 pairs.

Softwood Lumber Dispute The Canada–United States softwood lumber dispute is one of the most significant and long lasting trade disputes in modern history. The dispute has had its biggest effect on BC, the major Canadian exporter of softwood lumber to the USA. The USA sees Canadian lumber industry is unfairly subsidized by the federal and provincial governments.

Softwood Lumber Most timber in Canada is owned by provincial governments. The price charged to harvest the timber or the “stumpage fee" is set by the government rather than through a competitive market, as is done in the United States. Under U.S. trade laws, foreign goods benefiting from subsidies can be subject to a duty tax to offset the subsidy and bring the price of the product back up to market rates.

Trade in Service Trade between countries does not only encompass trade of goods. Trade in Services such as business services, travel or transportation services and corporation services also occur. Example of Trade in Service: The Simpsons: Canadian Show, Produced in the USA McDonalds Franchise: American company, in Canada American advertisements for Pepsi on our TV

Free Trade vs. Protectionism Tariffs: A tax that is paid when a product moves from one country to another Protectionism: the government’s policy of using tariffs and having rules that limit imports. Why do we impose Tariffs on foreign made items that we produce? Protectionism & Tariffs allow for Canadian companies to have an advantage over foreign competitors that may be producing items more cheaply.

Tariffs Without Tariffs With Tariffs Cost in Local Store Canadian Jeans $50 Foreign Jeans $45 Foreign Jeans $55 Results Few Sold Factory closes Unemployment  Money leaves Canada B. Many Sold Imports of Jeans higher Balance of trade hurt Canadian industries and jobs protected Money stays in Canada Imports of Jeans lower Balance of trade improved

Free Trade Free Trade: Free trade is the government policy of eliminating tariffs and other laws that are designed to restrict trade. History of Free Trade After WWII, majoring trading countries realized that they needs to avoid trade protection that had resulted in the The Great Depression To prevent another Depression they agreed to the General Agreement on Tariffs & Trade or the GATT.

Free Trade The GATT came into effect in 1947 and now includes more than 120 countries. In 1995, the World Trade Organization (WTO) was formed which was designed to resolve disputes under the laws of the GATT.

North American Free Trade Agreement (NAFTA) As we saw earlier in the unit, much of Canada’s trade occurs between the USA & Mexico. This is because of the creation of the North American Free Trade Agreement or NAFTA. NAFTA: was originally started in 1988 between the USA & Canada Revised in 1993 to included Mexico.

NAFTA NAFTA was very and still remains a controversial topic.