1. The Fundamentals of International Trade

2. In International trade obstacles can arise called trade barriers - restrictions that reduce free trade among countries.

3. 1) Tariffs Taxes imposed by the local government on imports.
Tariffs increase the price of the imported product in the local markets.
Governments use tariffs to protect local businesses from low-priced competitive products for other countries.

5. 1) Tariffs
Why is this an obstacle to international trade?

6. 2) Currency Fluctuations
Refers to the rate given by one country for another country’s currency.

7. 2) Currency Fluctuations
Example:
A Canadian business agrees to import $2 million worth of wine from France. If the exchange rage of the Euro shifts four cents from the time the product was ordered and the time it arrives, the wine shipment will now cost an extra $ CAD.
$ x 0.04 = $80 000

8. 2) Currency Fluctuations
Why is this an obstacle to international trade?

9. 3) Quotas
The number of imports (number of units or value of the shipment) – can have a time dimension to it (monthly, yearly, etc.)
Why is this an obstacle to international trade?

10. 4) Laws preventing certain products from entering / exiting Canada
Products that do not meet Canadian environmental or health standards are not allowed to enter Canada.

11. 5) Foreign Relations / Trade Sanctions
trade sanctions are used to influence the policies or actions of other nations

12. International Business Environmental Factors

13. 1) Geographic Conditions
climate, terrain, seaports, and natural resources of a country will affect business activities.
Weather can limit what crops can grow; many seaports and rivers can facilitate shipping products.

14. 2) Cultural and Social Factors
Refers to accepted behaviour, customs, and values of a society.
Language, education, religion, values, customs, and social relationships all affect international business.

15. 3) Political and Legal Factors
Governments influence business activities.
Example: Regulations on advertising, enforcement of contracts, safety inspections on food, political stability, type of government, and other policies towards business.

16. 4) Economic Conditions
Since resources are used to produce goods and services, the availability of resources can affect international business.
As well, the general level of education, type of economic system, types of industries in a country, and technology for producing and distributing goods and services can all affect international business.