advantage and disadv of trade

The Advantages and Disadvantages of

International Trade

Meeting Our Needs• With trade we can

sell something we don’t need or have made for trade and buy something we do need.

• It leads to benefits including jobs, investment, new goods and a wider choice of products and services

•Canada has many surplus goods in the areas of natural resources and agriculture.

•We use the money made from these goods to purchase goods we do not have:

•because of our climate (such as for agricultural products.)•or because of

products we “value” (like entertainment).

Job Creation Canada is a trading nation. Here are some statistics:

•1 in 3 jobs in Canada depend on exports.

•40% of all we produce is exported.

•Each $1 billion in goods and services equates to 6000 jobs.

•The wages earned from export companies pay for many of the other goods and services produced in our economy.

Attracting InvestmentInvestment in Canada by others often follows the increase in demand for those goods.

•Companies that export to Canada often build offices, warehouses of factories here.

•Others use their Canadian dollars to invest in Canadian stocks or bonds.

Increased technology increases Canadian competitiveness and profitability. It allows Canadian firms to compete with those in other countries.

Our new technology can also serve as an good or service we can export.

New Technology and Materials

More Diverse Goods and Services

Canadians enjoy goods that were once rare to Canada and services that in the past were only available in other countries.

The Disadvantages of Trade

Support for Non-Democratic Systems

•Decisions regarding resources in developing countries are often made by the rich or by corporations and often do not increase the welfare of the population.

•The increase trend towards corporate control over the production of food has lowered the available price available to independent farmers in the developing world.

•A large percentage of the final price paid for goods today do not go towards the producers of those goods, especially if the goods are produced in the developing world.

Cultural Identity Issues

•Culture is a major export of the United States. This transmits American values and lifestyle decisions around the world.

Cultural Identity Issues

•Branding is a worldwide phenomena. International companies spend billions each year (a projected worldwide total of $319 billion: $140 billion in the US, $90 billion in Europe)to acquire your “mind share.”

•Canada has minimum safety standards, wage requirements, workers compensation and health benefits.

•These benefits cost business and government money.

•Goods made in places that do not have these requirements are cheaper.

Social Welfare Concerns

Sasha Apulapusumicupu

Nike Sweat Shop Olympics Gold Medal Winner in

the Ten Hour Non-Stop Soccer Ball Sewing Championship

Estimates of the number of child workers worldwide are notoriously unreliable.

•This is partly because the definition of child labour is unclear at what point does helping out the family become work? But it is also because governments are not keen to measure a phenomenon that is officially not supposed to exist.

Environmental Issues•Canadian business are encouraged by consumers, labour groups and government to respect our water, air and land. •But our

pollution controls can not stop businesses from relocating where no such rules exist or are enforced.

Economic ConsiderationsMore than $1.5 trillion changes hands daily on global currency markets.

•The annual global trade in merchandise and services was $6.5 billion in 1998, the equivalent of just 4.3 days of trading on foreign exchange markets.

• Actual foreign exchange reserves in the hands of all governments in the same year totalled $1.6 trillion or just over a day’s trading on forex markets.

•Huge global corporations are becoming ever more powerful, eroding the regulatory powers of nation-states and riding roughshod over the rights of citizens to determine their own future.

•Out of the top 100 economic units on the planet, 51 are corporations. The other 49 are countries.

•While the top 200 corporations account for over a quarter of economic activity on the planet, they employ less than 1% of its workforce.

•The top 200 corporations’ sales levels are 18 times the combined annual income of the 1.2 billion poorest people.

•Political alliances often help corporations not people.

•Example: Halliburton – an engineering and construction company previously run by US Vice-President Dick Cheney that is developing an offshore oil and gas facility in Nigeria – has admitted that one of its subsidiaries paid bribes totalling $2.4 million to a Nigerian tax official to obtain favourable tax treatment.

Political Issues

•War and strife often occur because of a struggle for control over natural resources like diamonds or oil.

Political Issues

Today we enjoy freer world trade than in any other point in history. Here are some other achievements:

•Twenty percent of the worlds population control 80% of its assets, generate 82% of all world exports and receive 62% of all foreign investment.

•The income gap between the fifth of the world’s people living in the richest countries and the fifth living in the poorest jumped from 30:1 in 1960 to 74:1 in 1997.

The Results of Increased Trade: