1. Free Trade and Fair Trade
Global Trade
Free Trade and Fair Trade

2. Global Trade
Global trade is the act of buying and selling between nations to satisfy absent needs and wants
Nations can acquire wealth to develop human and natural resources

3. Why Trade
Because of Earth’s geography – climate and land forms determine distribution of resources
Countries will have surpluses of some resources and a lack of others – countries trade what they have in abundance

4. Factors Affecting Trade
Specialization
Climate, location, and resources determine how people of a particular country make a living
Canada’s coastline and continental shelf gives us an abundance of fish
Complementary
Countries with contrasting features are more likely to trade
Countries with a specialization in one good will trade with countries lacking that same good

5. Why Trade? Politics Distance
Some countries trade with one country and not another because of ideological bias
USA does not trade with Cuba and discourages other nations from doing so as well
Distance
Proximity to trading partners is convenient and reduces transportation costs
Canada and USA are each others greatest trading partners

6. Benefits of Global Trade
Bargains
Maximize profits and minimize expenses
Sell what you can make easily and cheaply and buy what you cannot produce
Canada sell grains and lumber and buy tropical fruit and manufactured goods
Greater Efficiency
Avoids spreading a nation’s resources thinly
Importing tropical fruits is more efficient than using valuable energy to power climate controlled greenhouses
Nations involved in trade are competing with other nations

7. Costs of Global Trade
Soil 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.
Increased demand for food and pressure on agricultural resources result in increased soil erosion and dependency on chemical fertilizers. Monoculture farming does not allow the crop rotation necessary for the soil to renourish.
The increase movement of good leads to accidents during transportation.
The demand for energy has led to higher consumption of fossil fuels and more CO2 emissions, loss of farmland because of hydroelectric projects.
Greater demand for resources results in over mining, foresting, fishing and harvesting with minimal replenishment.
…caused by a greater demand for manufactured goods and improved standard of living.
READ ALOUD: Exxon Valdez Oil Disaster pg

8. Regionalization of Trade
Trade Blocs are countries geographically located together who trade with each other
Examples: NAFTA, European Union, and Asia Pacific
Trade Blocs make it easier for countries to trade and also allows for people products and services to pass freely across boarders
Elimination of tariffs – a special tax that a country can place on imported products to ensure they are not cheaper than a countries own products

9. 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)
Although it is good to trade with your neighbours it is important to have relations in all corners of the world…again, don’t put all your eggs in one basket.
GATT:General Agreement on Tariffs and Trade – was created following WWII as an agency of the UN to regulate trade between nations including agreements focused on reducing tariffs and to act as a mediator in trade disputes between nations. READ ALOUD “Split-run magazines” – pg 312
G8 – 8 most economically advanced countries in the world READ ALOUD G8 and Less Developed Countries pg
MNC’s – largest General Motors of Detroit Michigan – is in 190 countries and has an annual revenue greater than the GNP of all but approximatley 15 of the world’s countries.
Multinational Corporations
Large, wealthy companies
operating in more than one country

10. Multinational Corporations
Benefits
Direct employment
Multiplier effect
Increased export levels
Costs
Environmental pollution
Slave Labour
Poor working conditions
Majority of profits leave country.
Set up shop in LDC’s because of tax breaks and slack employee and environmental rules.
Multiplier effect – jobs created as a result of the initial jobs giving people money to spend and governments tax dollars.
Working conditions - cheap wages, long hours in unsafe and unsanitary conditions (see video on Thursday) and the bulk of profits return to shareholders in MDC’s

11. Free Trade No interference from government
Prices reflect supply and demand. This determines where resources are sent
No taxes or trading barriers such as quotas between the countries that are trading
Allows faster and more business between those countries (benefiting them).

14. Cons of Free Trade
Jobs losses occur in the country that gets all its supplies from other countries (they aren’t getting stuff from their own country)
Reduced costs in transportation because of technological advances (plains, boats, trains, etc)
Workers in other countries are being exploited and harmed (working conditions)
Environmental impact in developed countries

15. Fair Trade
Aimed to help producers in developing countries and promote sustainability
Allows payment of a higher price to producers
Improves standards in the areas that are related to the production of the good
If focuses on exports from developing countries to developed countries

16. International Fair trade Certification Mark

17. Fair Trade Certified Mark (USA & Canada)

18. WFTO Fair Trade Organization Mark
World Fair Trade
Organization
(WFTO)

19. Fair Trade Items

20. Fair Trade Clothing

21. Fair Trade Jewellery

22. Pros and Cons of Fair Trade
Creates opportunities for less developed countries (now people are coming to them for food production)
Provides fair pay to the producers
Women’s work is properly valued and rewarded (equality)
Safe and healthy working environment for producers
Encourages better environmental practices
Companies will move operations to non fair trade regions – workers to be protected loses job
Monitoring bodies have no legal backing
Higher prices for consumers