BBI2O. Protectionism. When the government imposes policies designed to protect domestic producers by giving them an advantage over foreign imports. Ex: Tariffs, Quotas. Tariffs. An import tax on foreign goods. ID: 651914
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International Trade Agreements
When the government imposes policies designed to protect domestic producers by giving them an advantage over foreign imports
Ex: Tariffs, QuotasSlide3
An import tax on foreign goods
Artificially raises the price of imports to make Canadian products more competitive
Ex: French jam carries an 8.5% tariff, so if it normally sells for $1.80 per jar, the landed cost becomes $1.95
The more the gov’t wants to protect an industry, the higher the tariffSlide4
When a country imposes a limit on the amount of goods being imported or exported
Might be a specific quantity or a $ value
Limits competition from foreign goods
Allows greater control of supply, and therefore priceSlide5
Is Protectionism Good?
Tariffs and quotas are designed to protect domestic industries, so that’s good right?
If every country had heavily protectionist policies in place, the flow of international business would grind to a halt
What would this mean for countries like Canada?Slide6
More access to a variety of goods/services
Access to cheaper or higher quality goods than can be produced domestically
Access to goods we can’t produce domestically
Creates jobs and opportunities for Canadian companies to grow and profitSlide7
Foreign competition can drive Canadian companies out of business
Jobs move overseas
Foreign goods may be made using unethical practices (human rights, environmental standards)Slide8
Free Trade Agreements
In general, countries want goods to flow freely for the benefits of their citizens and businesses
Countries sign agreements stating that when they trade with one another, they will not use protectionist policiesSlide9
The Breton Woods Institutions
Formed after WWII by the “winners” in order to ensure that the global economy would recover as quickly as possible
Goal is to minimize global trade barriers in order to maximize international trade
One of these institutions was the General Agreement on Tariffs and Trade (GATT)Slide10
The GATT become the World Trade Organization in 1995
Has over 140 member countries
It’s rules govern 90% of international tradeSlide11
Canada-U.S. trade agreements
(1960s) – dropped trade barriers for cars, but also required for every car sold in Canada one had to be made in Canada
North American Free Trade Agreement (NAFTA) – an extension of the 1988 Canada-US Free Trade Agreement to include Mexico (1994)Slide12
Some agricultural products are excluded from the agreement
Only applies to goods produced within the borders of the member countries
Result: increased trade with US by 80%, with Mexico by 100%
Next: Free Trade Area of the Americas? (FTAA)Slide13
Other Free Trade Agreements
European Union (EU)
Asia-Pacific Economic Cooperation (APEC)
Many countries have bilateral agreements (Canada has free trade agreements with Chile and Israel for example)Slide14
What are the pros and cons of international trade?
What is protectionism?
Why do countries sign free trade agreements?
What are some examples of trade agreements?
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