Global TradeFree Trade and Fair TradeFree Trade and Fair Trade

Global trade is the act of Global trade is the act of buying and selling buying and selling between nations to between nations to satisfy absent needs and satisfy absent needs and wantswants

Nations can acquire Nations can acquire wealth to develop human wealth to develop human and natural resources and natural resources

Global Trade

Why Trade Because of Earth’s Because of Earth’s

geography – climate and geography – climate and land forms determine land forms determine distribution of resourcesdistribution of resources

Countries will have Countries will have surpluses of some resources surpluses of some resources and a lack of others – and a lack of others – countries trade what they countries trade what they have in abundance have in abundance

Factors Affecting Trade

SpecializationSpecialization

Climate, location, and Climate, location, and resources determine how resources determine how people of a particular people of a particular country make a livingcountry make a living

Canada’s coastline and Canada’s coastline and continental shelf gives continental shelf gives us an abundance of fishus an abundance of fish

ComplementaryComplementary

Countries with Countries with contrasting features are contrasting features are more likely to trademore likely to trade

Countries with a Countries with a specialization in one specialization in one good will trade with good will trade with countries lacking that countries lacking that

same good same good

Why Trade?

PoliticsPolitics

Some countries trade Some countries trade with one country and with one country and not another because of not another because of ideological biasideological bias

USA does not trade with USA does not trade with Cuba and discourages Cuba and discourages other nations from other nations from doing so as welldoing so as well

DistanceDistance

Proximity to trading Proximity to trading partners is convenient partners is convenient and reduces and reduces transportation coststransportation costs

Canada and USA are Canada and USA are each others greatest each others greatest trading partnerstrading partners

Benefits of Global TradeBargainsBargains

Maximize profits and Maximize profits and minimize expensesminimize expenses

Sell what you can make Sell what you can make easily and cheaply and buy easily and cheaply and buy what you cannot producewhat you cannot produce

Canada sell grains and Canada sell grains and lumber and buy tropical lumber and buy tropical fruit and manufactured fruit and manufactured goodsgoods

Greater EfficiencyGreater Efficiency

Avoids spreading a Avoids spreading a nation’s resources thinlynation’s resources thinly

Importing tropical fruits is Importing tropical fruits is more efficient than using more efficient than using valuable energy to power valuable energy to power climate controlled climate controlled greenhousesgreenhouses

Nations involved in trade Nations involved in trade are competing with other are competing with other nations nations

Costs of Global TradeSoil erosion and dependency on chemical

fertilizers.Industrial accidents including oil spills and

train derailments.Increased CO2 emissions, loss of farmland

and risk of radioactive accidents.Lack of sustainable development.Global warming, ozone depletion and air

pollution.

Regionalization of Trade Trade Blocs are countries geographically located Trade Blocs are countries geographically located

together who trade with each othertogether who trade with each other

Examples:Examples: NAFTA, European Union, and Asia Pacific NAFTA, European Union, and Asia Pacific

Trade Blocs make it easier for countries to trade and Trade Blocs make it easier for countries to trade and also allows for people products and services to pass also allows for people products and services to pass freely across boardersfreely across boarders

Elimination of Elimination of tariffstariffs – a special tax that a country – a special tax that a country can place on imported products to ensure they are can place on imported products to ensure they are not cheaper than a countries own productsnot cheaper than a countries own products

Globalized Trade

World Trade Organization Formerly known as GATT

Group of Eight (G8)Canada, US, Germany, Japan, Great Britain, France, Italy, Russia (and European Union)

Multinational CorporationsLarge, wealthy companies operating in more than one country

Multinational Corporations

BenefitsBenefitsDirect employmentMultiplier effectIncreased export

levels

CostsCostsEnvironmental

pollutionSlave LabourPoor working

conditionsMajority of profits

leave country.

Free Trade

No interference from governmentNo interference from government

Prices reflect supply and demand. This Prices reflect supply and demand. This determines where resources are sentdetermines where resources are sent

No taxes or trading barriers such as quotas No taxes or trading barriers such as quotas between the countries that are tradingbetween the countries that are trading

Allows faster and more business between Allows faster and more business between those countries (benefiting themthose countries (benefiting them).

Cons of Free Trade

Jobs losses occur in the country that gets all its supplies Jobs losses occur in the country that gets all its supplies from other countries (they aren’t getting stuff from their from other countries (they aren’t getting stuff from their own country)own country)

Reduced costs in transportation because of Reduced costs in transportation because of technological advances (plains, boats, trains, etc)technological advances (plains, boats, trains, etc)

Workers in other countries are being exploited and Workers in other countries are being exploited and harmed (working conditions)harmed (working conditions)

Environmental impact in developed countriesEnvironmental impact in developed countries

Fair Trade

Aimed to help producers in developing Aimed to help producers in developing countries and promote sustainabilitycountries and promote sustainability

Allows payment of a higher price to Allows payment of a higher price to producersproducers

Improves standards in the areas that are Improves standards in the areas that are related to the production of the goodrelated to the production of the good

If focuses on exports from developing If focuses on exports from developing countries to developed countries countries to developed countries

International Fair trade Certification Mark

Fair Trade Certified Mark (USA & Canada)

WFTO Fair Trade Organization Mark

World Fair Trade Organization (WFTO)

Fair Trade Items

Fair Trade Clothing

Fair Trade Jewellery

Pros and Cons of Fair Trade

ProsPros Creates opportunities for less Creates opportunities for less

developed countries (now developed countries (now people are coming to them for people are coming to them for food production)food production)

Provides fair pay to the Provides fair pay to the producersproducers

Women’s work is properly Women’s work is properly valued and rewarded (equality)valued and rewarded (equality)

Safe and healthy working Safe and healthy working environment for producersenvironment for producers

Encourages better Encourages better environmental practices environmental practices

ConsCons Companies will move Companies will move

operations to non fair trade operations to non fair trade regions – workers to be regions – workers to be protected loses jobprotected loses job

Monitoring bodies have no legal Monitoring bodies have no legal backingbacking

Higher prices for consumersHigher prices for consumers