1. The Foundations of Globalization Motivations and Free Trade

2. Overview Building Up to Freer Trade Building Up to Freer Trade Trade on the World Stage Trade on the World Stage Breton WoodsBreton Woods GATTGATT WTOWTO Trade and Canada Trade and Canada FTAFTA NAFTANAFTA Other Trade Blocs Other Trade Blocs Case Study: Canada/US Softwood Lumber Dispute Case Study: Canada/US Softwood Lumber Dispute

3. Building Up to Freer Trade 2 Schools of Thought: 1.)Government should be largely involved in the economy John Maynard Keynes 2.)Government should not interfere with the economy Milton Friedman Friedrich A. Hayek

4. HayekFriedmanKeynes Role of Government in Economy Limited Role Significant Role Is Government Intervention Required? No Human societies are too complex. Government policies cannot account for this No People are better off if they learn to adapt to changes in the market Yes Government must pull economies out of recession, through softening boom and bust cycles Where would Adam Smith fit in this table?

5. Trade on the World Stage Breton Woods, the GATT, and the WTO

6. Breton Woods Agreement An agreement coming out of WWII whose purpose was to both stabilize the world economy and to facilitate world trade An agreement coming out of WWII whose purpose was to both stabilize the world economy and to facilitate world trade World Bank World Bank International Monetary Fund (IMF) International Monetary Fund (IMF) Established the practise Established the practise of using GDP (Gross Domestic Product) as a measure of a countrys economic performance.

7. The GATT (General Agreement on Tariffs and Trade) Established in 1947 Established in 1947 Used to help continue peaceful relations between countries through the lowering of trade barriers Used to help continue peaceful relations between countries through the lowering of trade barriers Operated According to Four Principles: 1. Non-discriminatory trade 2. Treat imported goods from a member country the same as similar domestic goods 3. Protect domestic industries through tariffs only 4. Require any country that applies for membership to show a list of current tariffs and other trade restrictions

8. Breton Woods Agreement World BankGATT International Monetary Fund (IMF)

9. WTO (World Trade Organization) Evolved from the GATT Evolved from the GATT An international organization that looks to improve trade relations between countries through the removing of tariffs and other trade barriers An international organization that looks to improve trade relations between countries through the removing of tariffs and other trade barriers Its main purpose is to settle trade disputes amongst governments Its main purpose is to settle trade disputes amongst governments Has been a source of great controversy over the years Has been a source of great controversy over the years

10. Trade and Canada The Free Trade Agreement and NAFTA

11. FTA (Free Trade Agreement) An agreement between Canada and the US to eliminate trade barriers An agreement between Canada and the US to eliminate trade barriers Established in 1989 Established in 1989Purpose: Canada wanted access to the larger US market Canada wanted access to the larger US market US wanted access to Canadas natural resources US wanted access to Canadas natural resourcesResult: Removed most tariffs between Canada and the US Removed most tariffs between Canada and the US Very controversial Very controversial

12. NAFTA (North American Free Trade Agreement) An extension of the FTA, established in 1994, to include Mexico An extension of the FTA, established in 1994, to include Mexico Served to increase trade between the countries involved Served to increase trade between the countries involved Over the years, NAFTA has Over the years, NAFTA has helped Canada increase the amount of its exports into the United States There is still ongoing There is still ongoing tensions between workers unions and free trade supporters Some people argue that Free Trade has a bigger impact beyond the economy Some people argue that Free Trade has a bigger impact beyond the economy Some see NAFTA as a trade bloc, which can be seen to offer free trade within its regional boundaries, but can be seen to practise a form of protectionism with countries outside its membership Some see NAFTA as a trade bloc, which can be seen to offer free trade within its regional boundaries, but can be seen to practise a form of protectionism with countries outside its membership

13. The 4 Major Trade Blocs NAFTA North American Free Trade Agreement MERCOSUR Mercado Comun del Cono Sur, also known as Southern Common Markets (SCCM) ASEAN Association of Southeast Asian Nations EU European Union

14. Softwood: Not Exactly Free Trade America began, in the 1980s, to add a tariff to Canadian wood products America began, in the 1980s, to add a tariff to Canadian wood products In 2002, the US added a 27% duty on Canadian lumber In 2002, the US added a 27% duty on Canadian lumber In 2003, a NAFTA court ruled that the US duties, now 19%, were still too high and that the US government should review its numbers In 2003, a NAFTA court ruled that the US duties, now 19%, were still too high and that the US government should review its numbers Shortly after the NAFTA ruling, the WTO also ruled that US duties were too harsh Shortly after the NAFTA ruling, the WTO also ruled that US duties were too harsh In 2005, the US was ordered to return $5 Billion to Canadian lumber companies, but refused to comply In 2005, the US was ordered to return $5 Billion to Canadian lumber companies, but refused to comply In April of 2006 Canada and the US finally reached an agreement that would see the US return 80% of the collected fees, and Canada would agree to have only a 34% share of the US softwood lumber market In April of 2006 Canada and the US finally reached an agreement that would see the US return 80% of the collected fees, and Canada would agree to have only a 34% share of the US softwood lumber market In September of 2006 an agreement was finally reached that would see $4 billion dollars returned to Canadian Lumber companies In September of 2006 an agreement was finally reached that would see $4 billion dollars returned to Canadian Lumber companies

15. Some Final Questions How has free trade transformed how globalization is practised? How has free trade transformed how globalization is practised? How is the purpose of the following influence globalization? How is the purpose of the following influence globalization? - Breton Woods - WTO Could trade blocs be the beginning of a new form of imperialism? Could trade blocs be the beginning of a new form of imperialism?