1. Econ 120 Unit 10 International Trade Lesson 1 & 2

2. Warm up What is the Canadian Dollar Worth? Pg. 305 blue book

3. Canada’s Trade Abroad * OECD- Organization for Economic Co-operation and Development

4. Canadian Imports

5. Who does Canada trade with most?? 1 st US – We export 87% of our goods to the US and we import 63 % of our goods from the US. 2 nd Japan- We export 2.2 % to Japan and import 4.4 % from Japan.

6. What do we Export and import??? See pg. 304 (Blue book) for 2002 exports and imports.

7. Canada’s Major exports & imports… Exports…… Passenger cars and chassis (free trade agreement) Forestry products Imports…. Motor vehicle parts (free trade agreement)

8. Market transactions with foreign countries does have some unique characteristics: 1 st – Currency (most countries want to be paid in their own currency) 2 nd – brings different languages and customs together. 3 rd – political considerations

9. Why trade?? We want goods that are not available here. Prefer products from other countries (ex. Wines, foreign vehicles) Imports may be cheaper or better quality (absolute advantage).

10. The law of comparative advantage States that a country should specialize in and trade those items that it can produce relatively more efficiently than other countries. Read aloud  Application: A fable of advantage Pg. 333 MIC

11. Effects of international trade 1) resource allocations 2) product prices 3) resource prices

12. 1. Resource allocations Land resources could be used for factories rather than for forestry. Labour resources could be used to make one item rather than another (specialization)

13. 2. Product Prices Effected by transportation and currency value.

14. 3. Resource Prices pay for workers (labour-intensive products like making radios require more workers causing an increase in pay) land use (land- intensive products like grain cause land prices to increase)

15. Barriers to international trade These barriers are aimed at restricting the amount of foreign products that can be imported. Two barriers: 1.Tariffs (a tax imposed on imported products, counterveiling duties) 2. Non-tariff barriers (includes quota restrictions, embargo, “red tape”)

16. Embargo When a government puts a ban on importing certain products. Reasons: - health (grapes from Mexico, genetically modified food from Canada) - politics (boycotting wine from France) - national security (high-technology goods to the former Soviet Union)

17. Freer trade GATT – General Agreement on Tarriffs and Trade. - is aimed at reducing the barriers to international trade. NAFTA – North American Free Trade Agreement - was set up between Canada, US and Mexico in 1994.

18. WTO – world trade organization (formerly GATT) Countries wishing to enter the WTO had to abide by the following rules: –Liberalizing trade in services –Opening up their market to agricultural imports. –Protecting intellectual property rights –To give fair treatment to foreign investments.

19. Do Everyday Economics 9.2 pg. 330 - 331 (blue book) Answer questions pg. 331.

20. Do Everyday Economics 9.3 Pg. 333 -334 (blue book) “Softwood Lumber” Do questions pg. 334