International Business Final Exam - Jan 2024 AQA

Final Exam: - 1.5 hours - Monday, Jan 27th from 1:00 pm - 2:30 pm - Out of 108 marks - Bring a pencil, pen, eraser, pencil crayons - Part 1: MC (26 questions) - Part 2: Fill in the blanks (28 marks) - No word bank - Part 3: Cartoon analysis (12 marks) - 3 different cartoons - Part 4: Statements (9 marks) - 3 different statements - Draw the outcome/understanding of the statements - Part 5: Short answer questions (18 marks) - 6 short answer questions - Part 6: Long answer question (15 marks) - Choose 2 of 4 big themes and answer the questions provided Sep 4, 2024 Lesson #1 International Business: Many different things to many different people. No matter what however, for most Canadians, international business has made us wealthier. Let’s go over some definitions or explanations for the term international business: 1. Foreign affairs → trading goods/services between 2 countries 2. Business relationships between 2 countries → USA and Canada 3. Large corporations → McDonalds, Toyota, Apple, etc. ` 4. Importing (buying from other countries) & exporting (selling to other countries) → cars, oil, lumber Benefits of International Business Downsides of International Business Less expensive goods and services Overreliance on other countries imported from other countries Domestic job loss → because of (clothing) outsourcing Access to a greater variety of goods Potential for political conflict of and services (Fruits) business interruption Better relationships between countries Easier for domestic problems to Inexpensive access to lower labour spread to worldwide problems wages (China, India, & Indonesia) Sept 5, 2024 Lesson #2 There is always debate about the advantages or disadvantages to international business. Although Canada has benefited from international business, today there is growing backlash to elements of international business. Focusing on the economic concerns, let’s examine the reasons for this backlash: 1. Domestic job loss → Sometimes foreign companies expand into Canada and eliminate the competition → Ex. Walmart 2. Economies are tangled → What happens in one company impacts another → What happens in the USA affects Canada 3. Foreign companies bring profits back to the country of origin → Ex. Toyota 4. Foreign companies don't often their fair share of taxes to our government → Ex. Amazon 5. Consumers are price-sensitive and foreign businesses often offer cheaper prices than local Canadian businesses → Ex. Walmart Sept 6, 2024 Lesson #3 For the most part, Canada is an exporting nation. Exporting is when Canadian companies or Canadian government sell goods or services to other countries. Our largest export market is the USA. Canada’s top exports include the following: 1. Oil and gasoline 2. Automobiles 3. Agricultural products → beef, pork, pulses (lentils, peas legumes) 4. Gold (sometimes) 5. Timber → Lumber Canada’s oil sector contributes heavily to our national economy. Oil is found in many provinces such as: Alberta, Saskatchewan, NWT, Nova Scotia, Newfoundland and Labrador. Our oil moves through pipelines and is used mostly in our transportation sector, heating sector and manufacturing sector. China and the USA consume the most oil in the world. There are advantages and disadvantages to Canada’s reliance on oil as an export → here they are: Economic advantages Economic Disadvantages 1. Economic growth → provides good paying 1. Contributes to climate change jobs 2. Investment in oil industries means less 2. Investment in oil companies, oil refineries, oil investment in other industries exploration equipment 3. Non-renewable resource that is very costly to 3. Government collect taxes and royalties for operate (one day we will run out of oil) exporting oil 4. Lots of volatility in oil prices 4. When we export oil, it brings in new revenue so we can spend this revenue on other things 5. Causes disruptions and conflict 5. Enhance trade relationships with other countries Sept 9, 2024 Lesson #4 Canada has the world's 4th most amount of oil. The world consumes around 100 million BPD (Barrels Per Day) of oil. Although Canada is concerned with climate change, Canadian oil producers continue to produce and supply oil because it is profitable. The price of oil plays a significant role in oil production. When the price of oil is elevated, producers supply more to earn more profits. When the price of oil decreases, producers supply less. We currently live in an environment where oil production is very profitable. Sept 10, 2024 Lesson #5 Canada exports 5 million BPD of oil. The world uses around 100 million BPD. Canada recently built a new oil pipeline called the TransMountain Pipeline. It begins near Edmonton, Alberta and stretches to the west coast of Vancouver. There it is picked up by oil tankers and exported to Asia and the United States. The pipeline was initially constructed by a private American company. However because of large costs, this company sold the pipeline to our Federal Liberal Government. This pipeline should add around 500,000 extra barrels of oil per day to export. The following issues are issues we should ponder: 1. Canada wants to meet climate change targets but still invest in oil. 2. Alberta is always mad at Federal Liberals but the Liberals just build them a pipeline to use for export 3. Who will take ownership of this pipeline → could it be indigenous businesses? 4. Do people in Ontario or Toronto specifically have a bias or negative feeling about oil even though it creates well-paying jobs and taxes? 5. Is our oil “better” or less carbon intensive than oil that comes from other countries Remember, businesses in Canada will supply oil if the price is elevated and thus profitable. Until oil becomes non-profitable we can't expect oil suppliers to stop. Sept 11, 2024 Lesson #6 Moving on from exporting, let’s examine importing. Importing is when our country or the businesses in our country purchase goods or services from foreign countries. Importing is a sign of economic strength as it shows that people are buying goods and services produced in other countries → they can afford it! Canada relies and is known as an exporting nation. However, importing is just as important. When a country has imports greater than exports, we call this a trade deficit. When a country has exports greater than imports, we call this a trade surplus. Canada sometimes has a trade surplus and sometimes has a trade deficit. It depends on the country we are trading with and what month or year we are examining. For example, we have a trade deficit with China and a trade surplus with the USA. Don’t forget, we also import services not only tangible goods. Common Canadian imports: 1. Entertainment → social media, streaming services etc. 2. Workers → TFW → Temporary Foreign Workers → QSR, trades, primary industries, farming 3. Clothing 4. Produce 5. Technology 6. Automobiles By importing, Canada can focus on making, designing, manufacturing and creating the things we are good at. Therefore, other countries can focus on the things they are good at and we can trade between us and them. This is essentially called a COMPETITIVE ADVANTAGE. Sept 12, 2024 Lesson #7 As some of you have noted, one of the hidden challenges for importing is the value of our currency. If the value of our currency is far below the value of the currency of the country we are importing from, this will add costs to the importer. If the importer faces higher costs, they may pass on these costs to the end consumer (you and me) through higher prices. As an example, grocery stores often do this by increasing produce prices. This price increase is never vast but can make a difference. So a depreciating dollar is food for exports but not good for imports. An appreciating dollar is better for importers but not for exporters. Our dollar value bounces around but currency sits at 1 dollar for every 70 cents USD. China has been a strong exporter for so long because its dollar value is fixed at a low amount. What determines the value of our currency: 1. Inflation rates → tends to decrease the value of currency 2. Government deficits and debt and surpluses 3. Economic conditions. → a growing economy means an appreciating dollar. A shrinking economy means a depreciating dollar As you can see the dollar value impacts if we have a trade surplus or a trade deficit. **The value of a country's currency will affect the country's ability to import, therefore affecting the country's overall quality of life.** Sept 16, 2024 Lesson #8 Canadian companies don’t just import goods and services but import workers as well. These workers are imported on a temporary basis through the Temporary Foreign Worker program. These workers contribute greatly to our economy helping Canada grow its imports and exporting capacities. Many large corporations use the TFW in the following sectors: 1. Agricultural sector→ Farming, slaughterhouses, etc. 2. QSR → quick service restaurants → Tim Hortons 3. Customer service → customer relations. 4. Construction 5. Technology sector Which countries or regions do TFW’s come from? 1. Honduras 2. Colombia 3. India 4. Jamaica 5. Mexico TFW upsides TFW Downsides 1. Wages for TFW tend to be lower 1. Potential for costs to increase for the ○ If a business can save money local community because of greater on wages, profits can possibly demand → Housing/rental increase 2. Suppresses wages → keeps wages 2. Job vacancies will be filled down for the greater economy → ○ “Canadians” are not interested impacts all Canadian workers in hard jobs with hard conditions 3. Companies are not investing in productive capabilities → machines, 3. The federal Gov’t provides certain equipment, technology, automation, AI financial incentives for using the TFW program 4. Poor working conditions for the workers → around 6% of Canadian farms are not morally operating Activity: You are running a TFW program → would you use the TFW program? Why or why not? 2 paragraphs → read the response to the class Sept 17, 2024 Lesson #9 (Last lesson of the unit) Canada likes to import and export. We are a trading nation. Our imports, however, often are concentrated in only a few countries. For instance, we import cocoa beans from 4 West African countries → Nigeria, Cameroon, Ghana and the Ivory Coast. In fact, cocoa bean concentration is so strong that 70% of cocoa farming is done in these countries and 50% is done in 2 of those countries → Ghana and the Ivory Coast. Having such a concentration of our imports in so few countries can be very consequential. Here are some consequences of importing concentration: 1. Supply-side issues→ and problems in host countries → Conflict, and disease 2. Other climate change-related challenges can impact growth in these regions → reduce the supply of cocoa beans 3. Possible price increases because of a reduction in supply. → snickers bar increase in price 4. The exporting country does not develop other industries or sectors to diversify there economy 5. High worker exploitation Sep 18, 2024 UNIT 2 Lesson #10 This unit begins by examining economic relationships with the United States. By far, the USA is our largest trading partner. Close to 80% of our exports and a large portion of our imports come from the USA. This usually means we have a trade surplus with the Americans. We indeed have trade relationships with other countries but they are dwarfed by USA dominance. What is it that the USA likes so much about us →economically speaking: 1. Economic Stability 2. Our resources →Oil, Gasoline ( Non-renewable), Hydroelectricity ( Renewable) 3. Trade agreements→NAFTA, NAFTA 2.0, USMSA, etc. 4. Border town economies 5. One of their best most reliable customers for American products and services 6. Integrated economies→Auto sector 7. “Critical Minerals" →Nickel, uranium, gold, copper, potash, lithium, Sep 25, 2024/ Sept 26 Lesson #11 If we wanted to learn about a STATE what are some categories we should examine: 1. Demographics → gender, income levels, education levels etc 2. Geography → warm, cool mountains, close to lakes, flats etc. 3. Economic conditions → unemployment rate, growing or striking economy, what do they export or import with Canada 4. Culture → religions, languages, diversity 5. Political views → democratic, republican, swing state(sometimes one sometimes another) 6. Canada's trade relationship with that state 7. Natural resources What are some conclusions that we can make about State activity? 1. Our economies are integrated even tangled → especially in the automobile industry 2. Each state tries to utilize its competitive advantage → Texas → oil production 3. Demographics change from state to state → This can impact where CAN businesses expand → CAN banks have branched in the USA 4. The USA is a huge, diverse melting pot with lots of cultures 5. In general, Canada has a trade surplus with the USA→ we export more than we import to the USA “When the elephant sneezes, we catch a cold” ON EXAM CARTOON OF ELEPHANT 1. 2008 recession When they had economic issues we had to do extra protect ourselves → Banking sector in Canada 2. When the USA faces harsh economic conditions Canada also suffers as a result → Exports would decrease 3. We should do whatever we can to keep the US economy “healthy” 4. We are heavily connected to the US through strong trade relationships a. NAFTA b. USMCA c. CUSMA 5. Even though the US is a different country our economies are so tangled, that whatever happens to them affects us → climate change “The USA is our customer and competitor” 1. The US is our customer we export things to them and our competitor because they disrupt a lot Canadian Businesses (ex. Amazon) 2. Although Canada is heavily reliant on selling and exporting to the USA. Canadian Businesses often compete with American Businesses in global markets for international dominance (ex. Shopify, RBC) Sept 30, 2024 Lesson #12 Currently, Canada and the USA have a complicated relationship. Even though some would argue this is a reason to pull back on our ties with the USA, others have suggested we should push forward and align ourselves even more with the ELEPHANT. This uneasy relationship has been brewing for the past decade or so. → Here is why: 1. Covid → in general the USA was lighter with covid restrictions while Canada was harder 2. Trade agreement negotiations → at times they were sour and very difficult! → NAFTA 2.0 3. Opposing views on external conflicts → willing to do different things to help solve conflict → (Haiti) 4. Donald Trump → Don’t get brainwashed, trump is better → don't say this 5. General Political instability can lead to business uncertainty or business instability 6. General unease about American media's influence on regular Canadians (social media) Even though this uneasiness exists, Canada should push through and do the following: 1. Broaden our relationship with the USA! 2. Deepen our relationship with the USA! 3. Accelerate our relationship with the USA! How can we help the USA? 1. Export → Don’t let the USA import from countries that they are opposed to (only import uranium from us) 2. Help them at their southern border 3. Help fight climate change 4. Have a presence in Haiti 5. Invest in NATO protection 6. Export our critical minerals → lithium or nickel Oct 3, 2024 Lesson #14 Trade agreements all over the world have helped create and accelerate globalization. Globalization has many definitions and explanations → here are some of them: 1. Countries are interconnected→ They rely on each other they are not isolated (for the most part) → Tangled 2. Businesses operate all over the world→ they expand, they invest, and they can operate without physical borders → Netflix 3. Excess to a huge swath of goods and services → Housing materials 4. Worldwide supply chains. → very long supply chains 5. Companies are able to standardize their product or service offerings → pencils for high school students → companies don't have to differentiate between geographies. 6. Can be more competition in certain sectors or industries → retail The opposite of globalization is essentially PROTECTIONISM Benefits of Globalization Downsides of Globalization 1. Lower costing products → oil labour 1. Job loss 2. Access to new markets 2. Taxes across borders not being paid 3. Spread of new tech and innovations in Canada 3. Worker exploitation Benefits of Protectionism Downsides of protectionism 1. Create domestic jobs 1. Limited choices of products 2. Increase gross in domestic products 2. Products and services are connected 3. Domestic economy more competitive 3. Goods and services are concentrated globally in one area “canaof globalization and protectionism” Globalization characteristics Protectionism Characteristics 1. Depending on the industry, they are allowed to 1. Some industries don’t allow foreign competitors or invest into Canada. → retail make it very difficult to expand into Canada → EVs from China 2. Canadian businesses are encouraged to expand into foreign markets → Canadian Banks 2. Institutions like banks that are seen as systemically important in Canada have large barriers to entry 3. Streaming services made in the USA are available preventing foreign banks from entering our country for the Canadian viewer 3. Streaming services made in the USA must pay an 4. Worker mobility → you can find a job anywhere you extra tax to the Canadian government - DST - want → Canadian working in the USA digital services tax 4. Depending on what you want to do, and where you currently reside, the chances of you moving here to work are not 100% Globalization is better than protectionism or protectionism is better than globalization Topics to cover 1. Business cost 2. Business profits 3. Shareholders 4. Job loss or job gains 5. Unethical business practices 6. Our environment Closing remarks from the debate about Protections/globalization 1. Countries are trying to find out which method creates greater stability 2. Countries have come to rely on each other to ease consumer prices 3. Globalization gives companies and organizations access to lower labour costs 4. Both protectionism and globalization have the strength to help create a strong economy 5. Globalization has opened the doors to a diverse range of products and services available to us! Oct 9,2024 Must know New words/terms: 1. Subsidies: A gov’t investment or payment to a specific industry 2. Geopolitical: Geography and politics → Ukraine, Middle East, Sudan, etc… 3. Disinflation: When inflation is lowering 4. Fragmentation: Splitting into portions 5. Tepid: Cautious or slow 6. Blocs: Trading area with borders 7. Downturn: Decline of economic growth 8. Turmoil: Lots of problems 9. Resilience: Ability to withstand challenges and continue on 10.Fragile: Something that can easily break (economy can be fragile) 11.Volatility: Turbulent (up and down) 12.IMF = International Monetary Fund: Gives money to poor countries 13.Taming: To control (tame or control prices) Oct 15,2024 Lesson #15 Foreign companies from around the world like to invest in Canada. This means they like to build factories and manufacturing facilities in our country. However, many foreign companies do this because our provincial and federal governments subsidize this foreign expansion into Canada. Recently, this has happened in the battery manufacturing industry for electric vehicles. Our governments have spent billions to attract these foreign companies to our country → specifically in Ontario. What are the benefits to foreign expansion into Canada? → These benefits can be for Canada or the company 1. Create good paying sustainable jobs → benefit for Canada 2. Help the company grow with increased demand for products by Canadians → Benefit the company → opens up a market 3. Lots of financial assistance to the foreign company → chances of profit are higher → Benefit to the company 4. It can create better relationships between countries → good for the country 5. Canadian markets are a gateway to the USA market → good for the company 6. When foreign companies export their finished product to the USA, it creates new income for Canada not redistributed income → good for our country 7. Multiplier effect or spin-off jobs → trucking, restaurants, retail → country What are the downsides of foreign companies entering Canada? 1. Competition increases → hurts local Canadian profits and expansion 2. It creates more competition for Canadian companies → possibly putting them out of business 3. A portion of company earnings go to the foreign country where the company is headquartered 4. Canada depends on foreign countries too much → our economies are tangled 5. The construction of new facilities often takes place on prime agricultural land 6. Foreign companies from other countries may not follow or adhere to Canadian laws, rules and regulations 7. Foreign companies do not employ as many Canadians as usually promised from the start Oct 16, 2024 Lesson #16- Unit 2 A government subsidy can come in 2 forms → a loan or a grant. A loan is when the government loans money to a business in the hopes that is will get its money back plus interest. A grant is when the government simply gives money to a business without the expectation of being repaid. Our federal and provincial governments have decided to subsidize foreign companies in our country so these companies can open manufacturing facilities → mostly in the automobile or battery sector. Because subsidies are tax dollars, there are downsides and upsides to subsidies: Upsides to subsidies → pros Downsides to subsidies → cons 1. Economic growth → create 1. Is this a good use of our tax dollars → good-paying jobs opportunity cost → maybe the 2. Multiplier effect → spinoff jobs → government is sacrificing spending restaurants money on healthcare 3. Development of productive tools to 2. The government is picking winners make Canada or Canadian workers and losers more productive 3. The government and the company 4. The government may collect a greater often over-promise the outcomes → tax revenue for instance in the number of people 5. Creates many local suppliers to the that will be hired foreign manufacturing facilities 4. Most Canadians work for small businesses but only big businesses get subsidized 5. Subsidies don’t raise the wages of workers and don’t enhance productivity Oct 18, 2024 Lesson #17- Unit 2 (last lesson of unit #2) Globalization has taken on an unfamiliar form. This could pose a problem for a trade reliant country that is Canada. Globalization will still exist but there will be changes. Why has globalization taken on an unfamiliar form? → globalization looks different 1. There is a decline of stuff imported and exported a. Stuff = Tangible goods → why is there less importing and exporting of tangible goods i. Changing demographics → countries have older populations that don’t buy as much tangible goods 2. Less trade in goods and more in services, software or the digital economy → A.I a. Netflix and Tesla 3. China is not such a low wage anymore 4. Canadian business want to shorten supply chains 5. The shipping industry that moves our goods is also changing → costly, climate change which lowers water levels and conflicts 6. Such an increase in trade barriers → record number of tariffs Oct 21, 2024 Lesson #18- Unit #3 China is the world's second-largest economy. China is an authoritarian country. It is not a democracy. China has built its economic strength on manufacturing, factories, and exports. It has been able to do this through low wages paid to employees because of a large population. Foreign businesses have taken advantage of these low wages to build up their own companies. Canadians have benefited greatly because prices of stuff have been kept down. It has kept a lid on inflation. However, China is an overreliance on exports and is now deciding to shit to a more local based economy. This could work but the average person in China is more of a saver and not a spender. China is a culture of savers. China is also remaking its economy by exporting battery components and other critical minerals to the world. Nov 4, 2024 – Lesson stoffman did Lesson #32- First lesson of unit 4 #1 This unit examines free trade agreements and trade barriers. The first trade agreement we examine is NAFTA, CUSMA, or the USMCA. These all mean the same thing. The basic idea of a trade agreement is to make it easier for companies to cross a border tariff-free with imports or exports. However, during the first Trump presidency, he vowed to change and alter the original terms of NAFTA. This made Canada and Mexico nervous as the USA is ours and their largest and wealthiest customer. Luckily for Canada, we had great representation and gave up very little to the Americans and NAFTA essentially stayed the same. Thank you to our trade representative at the time Chrystia Freeland. What is it that Canada and the USA would negotiate specifically regarding NAFTA 1. Automobile sector → Trump wants Americans to drive American-made cars 75% of American cars should be American → Canada is exempted from this rule 2. America wanted greater access to our dairy, eggs and poultry market → 1% of the market to 3% 3. America wants to impose higher tariffs on Canadian softwood lumber 4. Ensuring Mexico has fair wages in export-oriented industries → like automobiles Nov 6, 2024 Lesson #33- unit 4 #2 Since Trump will be back in power, there are important things to keep in mind about our trade agreement and trade relationship with the USA: 1. Our economy is heavily knowledge/service (consulting, medicine, finance, teaching etc…) based → it’s not manufacturing based, therefore tariffs on our economy will be less harmful 2. Our dollar value is more significant than tariffs → when our dollar is low, we can export more. When our dollar is high, we can import more 3. Trump will lower American corporate taxes → Corporations can then lower their prices and this makes the American consumer “wealthier” → Americans will buy Canadian stuff 4. The tariff is shared between the supplier, producer and consumer → it is not a one time shock 5. Unless tariffs roll over from one year to the next, tariffs are not inflationary Nov 7, 2024 Lesson #34- unit 4 #3 - LEVERAGE A tariff is a tax Lets say you in Toronto want to sell a t-shirt in Florida for $1. If Trump implements a 20% tariff on you, then your price will increase to a $1.20 In 2026, the new NAFTA will be up for renegotiation. Trump will be in power during this time and therefore Mexico and Canada will need to confront an American first administration. Clearly this panics many Candian companies and this round of NAFTA negotiations will have the following implications on Canada: 1. Canada exports about 70% - 80% of goods to the USA → if these items are tariffed, that will have consequences for Canadian industries: a. Agriculture b. Automobiles and parts c. Lumber 2. Canada can implement retaliatory tariffs → target tariffs on republican states→ Kentucky whisky 3. Significant job loss in export oriented businesses → decline in economic growth 4. Will American streaming seen by canadians pay more tax → called the Digital Service Tax → netflix 5. Trump will inject instability into the trade system → this can be seen as a bug (not good) or as a feature. Nov 11, 2024 Lesson #35- unit 4 #3 Moving away from North American trade, let’s examine another large trade bloc called the European Union (EU). The EU is comprised of 27 member states. Again, the idea of the EU is that goods or services can cross borders tariff-free. The EU is a very large trading bloc and includes countries like Germany, France, Spain, Portugal, Greece, and Hungary. The EU is a MONETARY union but not a FISCAL union. Let’s do a quick explanation for: Monetary: The same EU currency → the EURO → the idea is the same currency reduces barriers to trade between countries in the EU → the value of the EURO is determined somewhat by the ECB Fiscal: Gov’t spending, borrowing taxation, paying debt, investing etc. → Each member state does not use the same fiscal approach for its citizens and domestic businesses Ideally, monetary policy and fiscal policy align. However, some countries prefer to save money (Germany) while others prefer to spend money (Greece). Countries in the EU that used to carry the EU economically are now struggling (Germany and France) while countries in the EU that used to struggle are now growing economically (Spain, Greece and Portugal). Why is this so? 1. Growing economies invest in → renewables, production, sustainability, technology, education, medicine, etc… 2. A slowing economy like Germany is losing its manufacturing power → competition from other countries (China), expensive labour (unions), because they import less oil from Russia, cost of business has increased 3. Germany also has strict laws around borrowing too much money → they don’t like debt → which is good and bad 4. Tourism has really picked up in Greece, Portugal, and Spain 5. Exports have really picked up in Greece, Portugal, and Spain Greece in 2008 Brexit 1. Liberal welfare policies that lead them 1. Britain failed to recover from the 2008 to high debt recession in a timely manner → the 2. After Greece’s financial crisis, the EU didn’t help asked for financial assistance from the 2. Britain wanted independent trade EU and the IMF deals and have full control over the 3. High national debt → Greece value of their currency borrowed too much money and 3. The UK wanted to have an accumulated a large national debt independent economy and more 4. Greek citizens were not paying taxes control over economic regualtions Conclusions to Brexit activity: 1. It has had and continues to have created economic consequences a. Inflation → prices have increased b. Labour shortages → fewer workers available to work c. Reduced migration into Britain → lots of jobs go unfilled → manual labour, farming d. Less trade → shortage of parts or equipment e. Much more administrative duties → Businesses are less productive 2. Social consequences!→ impact young people and understanding of Britain as a welcoming place 3. There might be less direct foreign investment in Britain 4. Many British left Britain and invested elsewhere in Europe like France, Belgium and Germany Nov 19, 2024 Lesson #38- unit 4 #5 The last portion of this unit examines the World Trade Organization (WTO). The WTO started around 30 years ago but has origins dating back to the end of World War II. The WTO is made up of most countries in the world and acts as a police officer for the world of international trade. The WTO is an advocate for international trade as it sees that trade can make people happier, healthier, and wealthier. Canada is and should be a large supporter of the WTO as we are a trading nation but not necessarily a strong economic nation compared to China or the USA. How is the WTO like a police officer? 1. Enforce rules of trade → however the rules are not easily enforced because they are not often legally binding → countries don’t have to listen to WTO rulings! 2. Reduce trade exploitation → try to create equal trading terms between wealthy countries and non-wealthy countries → Canada and Haiti 3. A dispute mechanism → solve disputes in trade → Tariff elimination 4. There can be fines or sanctions for countries that disobey trade laws 5. The WTO tries to show impartiality → wealthy countries or powerful do not always get their way! → very important for Canada Concluding WTO Points 1. The WTO is made of judges and those judges are appointed by the US president and surprise-surprise Trump doesn’t like appointing judges to fill vacant roles → This diminishes the impact or purpose of the WTO 2. Is the WTO still relevant? → certainly is for Canada but maybe not more powerful countries. 3. Can the WTO have a purpose in a digital economy? → when there is less trade in goods 4. Canada needs a strong, supportive WTO → We are a trading nation Canada needs the support 5. The WTO creates policies to encourage trade without the use of trade barriers → a tariff Nov 21, 2024 Lesson #39 - unit 5 #1 This unit begins by examining trade barriers. Trade barriers slow, diminish, or even eliminate trade between countries. Since Canada is a trading nation, we usually oppose formal trade barriers. Regardless, trade barriers around the world are increasing instead of decreasing. As countries become more protectionist, Canada will lose out on potential trade agreements, thus hurting Canada economically and socially. The following is a list with brief descriptions of common trade barriers used today: 1. Tariff → tax on imported or exported goods → look at lesson 34 for better understanding → what gets taxed gets contracts 2. Non-tariff barriers → Gov’t rule or regulation, geography, accessibility issues 3. Trade embargo → specific BAN on specific product or service → mad cow disease; Alberta had one cow with this and China, Japan and South Korea decided not to import beef from our entire country. 4. Trade Sanction → a ban that is trying to encourage or discourage a foreign government from doing or not doing something. → North Korea, Russia, and Iran 5. Currency conversion → This adds fees and thus can be expensive for people or businesses to convert currencies 6. Trade Quota → restriction on the amount of something that can be imported and exported → eggs, dairy (milk, yogurt, butter, ice cream and cheese), and chicken. Nov 25, 2024 Lesson #39 - unit 5 #2 The first barrier to trade that we examine is called Supply Management. Supply management is directly connected to Canada’s dairy, eggs, and poultry sectors. Supply management restricts the amount of foreign dairy, egg, and poultry exported to Canadian grocery stores. Therefore, the dairy, eggs, or chicken you consume is most likely Canadian-made from Canadian farmers. Supply management is a barrier to trade as it restricts foreign competition, so Canadian farmers don’t have to fully compete with foreign companies. Let's highlight some upsides and downsides to supply management: Upsides Downsides 1. Job protection for Canadian farmers! 1. Higher consumer prices → we pay a 2. Domestic production growth → less lot more for dairy, eggs, and chicken reliance on other countries then Americans! 3. Farmer revenue is stable 2. Other countries will like us less 4. Very reliable supply of critical foods because we are being protectionist → 5. Very helpful to rural communities reciprocal tariffs 3. Less innovation or need to innovate inside the dairy, eggs, or poultry sector 4. Less supply or excess is put in the garbage! 5. Administrative costs to running supply management Nov 28, 2024 Lesson #40 - unit 5 #3 Canada takes supply management very seriously. Supply management has its benefits and its downsides. There are some dynamic points that we should consider around supply management: 1. Supply management is a hard system to change because of strong lobbying by BIG MILK! → to advocate for certain industries → dairy, poultry, and eggs → therefore supply management stays intact 2. Most of Canada’s dairy, egg, and poultry farmers are in Ontario and Quebec and these are vote-rich provinces that can determine who the next prime minister of our country is → therefore supply management stays intact 3. Currently, a law is being negotiated that will make it illegal to negotiate supply management during future trade negotiations with other countries → therefore, supply management stays intact → this point especially can create conflict with other countries Dec 3, 2024 Lesson #41 - unit 5 #4 The next trade barrier we dissect is the Trade EMBARGO. Remember, a trade embargo is a barrier to halt or stop the import or export of only 1 specific item. During the 1970s a famous trade embargo happened with the product → oil. Countries in the Middle East like Saudi Arabia, Iraq, Kuwait, and the UAE decided to halt all oil exports to North America. This had a devastating impact on our economy as the price of gasoline to fuel our cars and heat our homes and businesses became very expensive. These countries decided to implement the embargo to punish the USA for its support of Israel. The good news is that a trade embargo like this would not have nearly the same significance in 2024. Here is why: 1. There are more renewable energy sources → solar, nuclear, wind, electricity, etc… 2. America is now an energy, independent superpower → They don't have to rely on other countries for energy 3. From a Canadian perspective, we are now the fourth-largest oil producer in the world 4. Less concentration of oil→ Where it is is Production→ Canada, USA, Etc. 5. Growing economies like the USA have a ravenous appetite for oil Lesson #42 - unit 5 #5 The next trade barrier that we examine is called a trade sanction. A sanction is not a trade embargo. It is a more generalized barrier to trade that alters the behaviour of countries that Canada does not align with or share values with. A sanction halts or stops investment into the sanctioned country or halts and stops imports or exports with the sanctioned country. Sanctions are usually levied or applied to government leaders or friends of government leaders and sometimes to private citizens. Countries that Canada has implemented trade sanctions upon include: 1. Russia 2. North Korea 3. Iraq 4. Afghanistan 5. Iran What do actual sanctions look like → What are actual examples of trade sanctions: 1. We stop importing from the sanctioned country → Russian oil 2. We stop exporting to the sanctioned country → industrial parts → things that go into the making of other things 3. We stop investing in the sanctioned country → Businesses either pull out of the sanctioned country or don’t open operations in the sanctioned country a. Mc Donalds b. Shopify c. Apple d. Under Armour 4. Freeze the bank accounts of certain Russian officials who have bank accounts in Canada 5. Eliminate the sanctioned country from certain world trade agreements/organizations, etc… → No Olympics → Russia was kicked out of SWIFT Dec 9, 2024 Lesson #43 - unit 5 #6 The last barrier we examine is also an opportunity for international business. It has to do with the value of our dollar. Currently, the value of the Canadian dollar is decreasing or depreciating compared to the American dollar. To purchase USD$1 it would cost you around CAD$1.41. This makes our importing expensive while our exporting becomes more attractive to America. Our dollar value floats. This means our dollar value changes on a regular basis but recently our dollar has depreciated more so than in other years. Here is why: 1. The demand for Canadian currency has decreased (lower price) while the demand for American currency has increased (higher price) 2. The threat of Trump tariffs → almost 15%-20% of our economy is export-oriented to the USA → a potential recession looms which lowers our dollar value 3. The Canadian economy is neither growing nor shrinking → it’s stagnant 4. The Canadian dollar traditionally is connected to the price of Canadian oil → if the price of Canadian oil decreases so does our dollar and vice versa All is not lost, however. There are “winners” in a low-dollar economy: 1. Exporters → cars, car parts, agricultural commodities → beef, legumes, potatoes, corn, canola, etc… → 1 in 6 jobs in Canada are export-related 2. Exporters in oil → our oil sector that exports to the USA 3. Businesses that sell goods or services in American money and then exchange that money for Canadian dollars 4. Our tourism industry → border towns → Niagra Falls, Windsor, Great Wolf Lodge The problem is that our imports will struggle and we import what? 1. Foods 2. Clothing 3. Cars 4. Electronics These costs will be passed to the end consumer Jan 6, 2025 Lesson #45 - unit 5 #8 – last unit We end this unit by examining a truly international business called BYD. BYD or build your dreams is an electric car company based out of China. You may not have heard of BYD because there are no BYDs in Canada or the USA. However, BYD is the fastest-growing electric car company in the world as it manufactures cars and car parts. Interestingly BYD does have a small plant in New Market Ontario making electric busses for our beloved TTC. Why is BYD then so successful as an electric car maker? 1. They are capturing the demand for affordable electric cars → most Canadian-made or American-made EVs are not yet affordable for the average consumer but BYD is 2. BYD satisfies the need for environmentally friendly drivers → it saves money for car drivers 3. BYD is heavily subsidized by the Chinese communist government → BYD spends less of its own money on building a car while companies in Canada and the USA must spend their own money 4. BYD owns most of their supply chains (mining, refine, manufacture, sell) → vertical integration 5. First succeed domestically before expanding internationally What are some events that are holding BYD back from true global success? 1. Increased protectionism → tariffs → 100% 2. Politics has become intertwined into the car industry 3. Ethical and moral issues with manufacturing in China → go against Canadian values 4. There are other EV’s available (Tesla) but none as affordable 5. The Canadian government and USA government really feels that BYD has an unfair advantage because of their low costs of production Jan 7, 2025 Lesson #46 - unit 6 #1 – first lesson of last unit The last unit of this course examines supply chains. A supply chain is the processes, systems, and logistics of moving tangible products from one point to another. Tangible products include food, clothing, electronics, and other touchable things. Supply chains can be long or short, and the length of supply chains has advantages and disadvantages. Regardless, many factors determine how effective or ineffective a supply chain is → here are some of them: 1. Trade disputes → Tariff → a barrier to trade → there are now more tariffs than ever before → hurts and adds costs to the supply chain 2. Weather → drought, floods, fires, etc… 3. Political conflict → Global conflict → Russia/Ukraine war → wheat, oil, vodka 4. Economic growth or decline → each plays a role in the demand for goods 5. Pandemic → global disruption 6. Strikes, worker protests, etc… Everything after this read but don’t study Why is the 401 a supply chain? 1. Trucks shipping goods east and west 2. It spans from Windsor to Montreal 3. For truckers, that's their office Jan 8, 2025 Lesson #47 - unit 6 #2 Another important supply chain creates 30% of our international trade with the USA. this is called the Gordy Howe Bridge between Windsor Ontario and Detroit Michigan. This bridge transports many goods to and from the USA. Therefore, it creates substantial economic growth but of course, there are significant environmental concerns. The bridge itself is replacing a much older Ambassador bridge that is currency 95 years old. The Gordy Howe has 6 lanes of traffic and is built to increase productivity and profitability between the USA and Canada. It took our federal government many years to build but our gov’t paid for the whole bridge expense of 6.4 billion dollars. Many trucks that use this bridge transport industrial goods → Industrial goods are goods that help make the end product. (widget). Economic growth Environmental concerns 1. Access to the USA market 1. Noise pollution, air pollution 2. Creates jobs 2. Building a bridge of this magnitude, 3. Revenue generation from especially with concrete is importing/exporting carbon-intensive 3. Harm marine life Identify another bridge that connects canada and usa Ogdensburg-Prescott International Bridge New York in the United States to Johnstown, Ontario in Canada. 2,414 m Jan 9, 2025 Lesson #48 - unit 6 #3 The largest supply chain company in the world (in over 130 countries) is called MAERSK. Maersk is a shipping company that transports most of the world’s tangible goods. These ships mostly begin their journey in China, as China is the world’s largest exporter. From China, Maersk travels to Europe and North America and drops off Chinese exports at local ports. However, because of increasing tariffs on Chinese exports, Maersk is using a China-plus-one strategy. This strategy is being used by Chinese companies to avoid tariffs by having part or all of the manufacturing of goods not exported from China but instead exported from plus one, like Indonesia, India, and Vietnam. Maersk has so far successfully pivoted in this China plus one strategy and it continues to move products into our oceans on their ships. Maersk also has a trucking fleet, an airplane fleet, a train fleet, and even warehouses to store inventory for export. Jan 13, 2025 Lesson #49 - unit 6 #4 The Panama camel toe is a supply chain that carries many goods from Asia to North America for consumption. The Panama canal is located in Panama and is owned mostly by the Panama government. The Gov’t of Panama collects fees every time a ship crosses the canal. Close to 40% of our goods and American goods have been through this canal. China and or Hong Kong have taken some influence and ownership over parts of the canal. This has started to worry some Americans as they see this canal as a part of its national security. this is especially so because many of these goods are also military goods. The camel toe is at risk of climate change and the water levels are declining. Less water means ships must carry less volume, become smaller or find other shipping routes. You can see how we don’t diversify some of our supply chains. We rely on the 401, the Gordie Howe Bridge and the Panama Camel Toe for our wide international needs. Jan 14, 2025 Lesson #50 - unit 6 #5 The last lesson, examines how complicated many businesses in Canada have with understanding there supply chains. Big businesses can better understand there supply chains because they have the resources to do so. Small businesses however, struggle to understand there supply chains. Recently, the federal Canadian government enacted legislation (laws) to punish or penalize or fine companies that use forced or child labour in their supply chains. It is very difficult to detect such actions but many Canadian consumers are in fact concerned about where the origins of there products and food come from. The USA does a far better job than Canada in enforcing trade restrictions with countries that use forced or child labour in supply chains. It is up to us to change supply chains for the better as our purchase decisions determine if a business is succeeding or failing.

International Business Final Exam - Jan 2024 AQA

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