1. What are the problems might be associated with international trade? 1 Costs of International Trade

2. The hidden or social costs often associated with international trade include: offshore outsourcing human rights or labour abuses environmental degradation. Offshore Outsourcing Offshore outsourcing occurs when businesses decide to produce all or part of their goods in countries where labour costs are lower. 2

3. Human Rights Issues and Labour Abuses Some workers in poor countries face labour exploitation, such as child labour, physical and sexual abuses, forced confinement, non-payment of wages, denial of food and health care, and excessive working hours. 3

4. 4 Environmental Degradation Sustainable development is the process of developing land, cities, businesses, and communities that meet the needs of the present generation without compromising those of the future. Environmental degradation is the consumption of natural resources, such as trees, water, earth, habitat, and air, faster that nature can replenish them.

5. Barriers to International Business The Canadian government uses barriers, often referred to a roadblocks, to help protect domestic businesses and consumers. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment. Tariffs Tariffs, also called customs duties, are a form of tax on certain types of imports. Finished imported goods include tariffs, which increase their prices. 5

6. Non-tariff Barriers Non-tariff barriers are controls or standards for the quality of imported goods set so high that foreign competitors cannot enter the market. Ex. Quality Conditions 6

7. Costs of Importing and Exporting The landed cost is the actual cost of an imported purchased item, composed of the vendor cost, transportation charges, duties, taxes, broker fees, and any other charges. 7

8. Excise Taxes An excise tax is a tax on the manufacture, sale, or consumption of a particular product within a country. Currency Fluctuations Since currency rates fluctuate on a daily basis, an international purchase made on one day may cost less or more than another purchase on the following day. Shifting currency exchange rates vary as the economic strength of the two countries change on a daily or weekly basis. 8