BBB4M CHAPTER 1

1.1 Evolution of Global Trade Business - The manufacturing and/or sale of goods and/or services to satisfy the wants and needs of consumers to make a profit. Transaction - An exchange of things of value. $

1.1 Evolution of Global Trade Domestic business - A business that makes most of its transactions within the borders of the country in which it is based. A domestic business in Canada is: owned by Canadians, relies on Canadian products and services, sells products and services to Canadians International business - The economic system of transactions conducted between businesses located in different countries.

1.1 Evolution of Global Trade Domestic transactions are made between two Canadian companies. International transactions involve a Canadian company and a non-Canadian company. Chapter 1: WHAT IS TRADE?

1.1 Evolution of Global Trade Domestic market - The customers of a business who live in the country where the business operates. Foreign market - The customers of a business who live in a different country than the one where the business operates. Trading partner - When a business in Canada develops a relationship with a business in another country, that country becomes a trading partner with Canada Chapter 1: WHAT IS TRADE?

1.1 Evolution of Global Trade Five ways for a business to be considered an international business: Own a retail or distribution outlet in another country Own a manufacturing plant in another country Export to businesses in another country Import from businesses in another country Invest in businesses in another country Chapter 1: WHAT IS TRADE?

1.1 Evolution of Global Trade SELF-SUFFICIENCY – The abiity to provide for all your basic needs, such as food, clothing, shelter, and water, without relying on anyone else. intentional communities, are set up to be somewhat self-sufficient.  There are over 500 in the world; they include Eco-villages, student co-ops, and urban housing cooperatives. They are often based on shared values or themes such as environmentally sustainable living.

1.1 Evolution of Global Trade Trade had been free for the most part Guilds (associations of merchants and/or craftspeople) : they controlled the manufacturing and sale of the products made by the people of the town No goods could be imported into town if they competed with local products and foreign merchants/traders had to pay a fee to trade un town

1.2 History of Canadian Trade Explorers from France and England landed in what is now Canada in the 1600s Traded with First Nations people, especially the Ojibwa and the Cree, for fur and food, then sent goods back to Europe The success of this international business led to the establishment of colonies and outposts in Canada, notably the Hudson’s Bay Company and the North West Company Chapter 1: WHAT IS TRADE?

1.2 History of Canadian Trade Trade with the United States United States declared independence from Britain in late 1700s Needed to become self-reliant Invention of steam engine, cotton gin helped rapid growth of American industry Canada supplied raw materials that were needed in the United States United States became Canada’s largest trading partner—this remains true today Chapter 1: WHAT IS TRADE?

1.2 History of Canadian Trade Trade with Asia Canada began trading with Japan after World War II Japan became known for high-quality electronics and automobiles China has more recently become a trading partner Chinese-made products are inexpensive and well made, and popular with North American retailers Chapter 1: WHAT IS TRADE?

History of Canadian Trade Trade with Mexico Developed since signing NAFTA in 1993 Goods made in Mexico and the United States now enter Canada duty-free Mexico has become one of Canada’s top five trading partners since 2000 Chapter 1: WHAT IS TRADE?

History of Canadian Trade Trade with Emerging Markets The Middle East Has traditionally centred on oil, but this commodity is not sustainable Political instability, lack of industrialization in much of the region has limited trade United Arab Emirates (Dubai), Israel, and Egypt have established trading relationships with Canadian businesses that do not depend on oil Chapter 1: WHAT IS TRADE?

History of Canadian Trade Trade with Emerging Markets India Population of over one billion people Workforce generally young and well educated Has become major centre of outsourcing and manufacturing Lack of infrastructure and widespread corruption are persistent problems Indian companies are aggressively expanding into international markets Used under license from Shutterstock, Inc. Chapter 1: WHAT IS TRADE?

History of Canadian Trade © iStockphoto.com Trade with Emerging Markets Africa African imports to Canada are very low Business opportunities limited by unstable governments, lack of infrastructure, rural economies Rich in primary resources Some countries (Morocco, South Africa) are beginning to emerge as major trading partners Chapter 1: WHAT IS TRADE?

1.3 Canada’s Economic Identity Interdependence - The reliance of two or more nations on each other for products or services. Three main areas of interdependence: 1. Primary/Extracting industries 2. Secondary/Manufacturing industries 3. Tertiary/Service industries

1.3 Canada’s Economic Identity Primary industries The sector of the economy characterized by the extraction of natural resources from the earth or sea. Five major primary industries: agriculture fishing, hunting, and trapping forestry and logging energy Mining In Canada, water is sometimes included in this list as well Chapter 1: WHAT IS TRADE?

1.3 Canada’s Economic Identity © iStockphoto.com Secondary Industries Industries that create a finished, usable product. Secondary manufacturing produces capital goods (products used by businesses) and consumer goods (products purchased by individuals). Chapter 1: WHAT IS TRADE?

1.3 Canada’s Economic Identity Tertiary industries (service sector) Industries that do not make a product or extract resources from the earth, but provide necessary services to consumers and other businesses. Examples include banking, construction, communications, transportation, and retail sales. Chapter 1: WHAT IS TRADE?

1.4 Advantages of International Trade Meeting Needs Job Creation Attracting Investment New Technology & Materials Diverse Products & Services Chapter 1: WHAT IS TRADE?

1.4 Disadvantages of International trade Support of Non-Democratic Systems Cultural Identity Issues Social Welfare Issues Environmental Issues Political Issues

1.5 Barriers to International Trade TARIFFS CURRENCY FLUCTUATION INVESTMENT REGULATIONS ENVIRONMENTAL RESTRICTIONS FOREIGN RELATIONS AND TRADE SANCTIONS

1.5 Barriers to International Trade SAFETY REGULATIONS IMMIGRATION POLICIES