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

Advantages Meeting 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

Advantages Job 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

Advantages Attracting 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

Advantages New 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

Advantages New 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)

Advantages Diverse 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.

Disadvantages Social 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

Disadvantages Environmental 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

Disadvantages Political 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