Free Trade VS. Protectionism. Tariffs A tariff is a tax on an import. Tariffs cause foreign items to be more expensive as a tax is charged to each item.

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Presentation transcript:

Free Trade VS. Protectionism

Tariffs A tariff is a tax on an import. Tariffs cause foreign items to be more expensive as a tax is charged to each item that enters Canada.

Protectionism Protectionism is a government policy of using tariffs and having rules that limit imports. These tariffs are used to protect Canadian manufacturers. Similar items which are imported from other countries cheaper then Canadian manufactures' can make, are charged a tax to increase the price, thus making the foreign product more expensive, keeping the prices more even.

Free trade is a government policy that eliminates tariffs and other laws designed to restrict trade. The basic idea of Free trade is that enhanced trade among nations is good for everyone. Free Trade

GATT & WTO After WWII many major trading countries realized they needed to avoid trading protectionism that was disastrous in the 1930 Depression. Many countries (more than 120 today) agreed on a set of rules to govern and encourage trade. The GATT (General Agreement on Tariffs and Trades) was established in The WTO (World trade Organization) was the latest addition to GATT, which was geared to resolve disputes under GATT rules. This dispute resolution can be very slow and uncertain. E.G. Softwood Lumber dispute between USA & Canada.

NAFTA The North American Free Trade Agreement has helped free trade across the world. Canada has pursued Free Trade directly from the USA and other countries. USA Free trade can be substantially beneficial to Canada due to our enormous amount of trading. Recently there have been discussions to have a free trade for the Americas with the Pacific Rim. If this were ever to happen, it could be very lucrative for Canada.

The Future of Canadian Trade International trade has allowed most Canadians to enjoy a high standard of living. To continue this in the future, we must find the answers to several critical trade related questions. Can we maintain our traditional markets? We are in competition with developing nations over natural resource based resources. Can we export more manufactured goods? Can we develop new products to create new markets? We must continue to create new products that are wanted in world markets. Can we increase our exports of services? We currently carry a trade deficit in services. We need to increase this to make a trade surplus.

Should we reduce our trade reliance on the USA? Currently our biggest trading partner is the USA. This dependence puts our economy at risk by US protectionist policies, or the US economy. Can we compete with NAFTA and beyond? American companies have enormous power (Microsoft) and Mexico offers cheap labour. How can we compete with our partners to tap into economic markets like India & China?

Do Questions 2, 3, 4a, 5a,d,e, 6a, 7 p 464.