International Trade
Advantages and Disadvantages
Reasons for International
Trade



Sell something we don’t need or have made
for trade and buy something that we need
Many benefits
Trade creates jobs, attracts investment,
attracts new technology and materials, and
offers Canadian a wider choice in products
and services
Reasons for International
Trade


Range of choice provides more competition
in the marketplace
Result – competitive pricing, technological
advances, improved services – including
the education and training of Canadian
employees
Advantages
Meeting our Needs
 Allows Canadians to have access to many
goods that we are unable to produce
ourselves (pineapple, motor vehicles….)
 Trading Partners get something they need
by trading something that they do not
need
Advantages
Job Creation
 Foreign businesses buy Canadian products and
services, which leads to more jobs for Canadians
 Exports are critical to the Canadian economy
 One out of three Canadian jobs depends on
exports
 More than 40% of everything Canada produces is
exported (50% for Ontario)
 Every $1 billion in exports means over 6000 jobs
for Canadian
Advantages
Attracting Investment
 Investment follows trade
 Many foreign companies, when demand is
proven through trade, will invest in an
office, factory or distribution warehouse in
Canada to simplify their trade and reduce
costs
 This investment creates other jobs in
construction, sales and office management
Advantages
New Technology and Material
 Development of new technology promotes
competitiveness and profitability
 Newly developed technology sold through
patents to foreign companies – collecting
annual fees, royalty percentage or a onetime payment, outlined very specifically in
a contract
Advantages
New Technology and Material
 E.g. Reliability Software, Asset
performance Management Software –
Capital Intensive Industries – metals,
mining, steel, utilities, power generation,
oil and gas
 Sell software maintenance and support,
and services (professional ,
implementation, technical services)
Advantages
Diverse Products and Services
 Foreign trade opens up the world as a market,
delivering a wide range of foods, high fashions,
and new inventions to the Canadian market
 Foreign travel, banking, consultation and other
services are also available to the Canadian
consumer
 Businesses must consider that their competition
for similar products and services is no longer just
in the same city but anywhere in the world.
Disadvantages
Support of Non-Democratic Systems
 Great hardship on people who have no
choice but to grow a profitable cash crop
(e.g. coffee beans)
 Local farmers wishes to grow food for their
families are ignored
Disadvantages
Cultural Identity Issues
 Culture is “exported” with the products
sold internationally
 Symbols of American culture include
products like Coca-Cola, McDonald’s and
Nike.
Disadvantages
Social Welfare Issues
 Maintaining safety standards, minimum
wages, worker’s compensation, and health
benefits cost Canadian businesses and
Canadian taxpayers a great deal of money
 Countries that do not maintain these high
standards can make products less
expensively
Disadvantages
Environmental Issues
 Canada has highly regulated environmental
protection laws
 Many businesses may chose to do business
elsewhere if the pollution controls,
recycling laws and emission controls are
not too stringent or expensive for them to
meet
Disadvantages
Political Issues
 Ware and strife often occur because of
natural resources.
 Thousands of people have been killed for
control of oil, others for control of the
diamond trade or even farmland.
 Trade in precious commodities can cause
political alliances that do not help the local
people
Your task (select one):

Research a recent
environmental
issue that directly
affected a Canadian
business that sells
its products
internationally


Give a specific example of
a cultural message carried
by three different
American-made products.
Discuss the impact and
whether you believe it is a
positive or negative
influence