International Trade, Agreements, and Organizations (PDF)

Key Points: International Trade Agreements and Organizations 1. Globalization and International Trade ​ Definition: Movement of goods, services, technology, investment, ideas, and people worldwide. ​ Positive Effects: ○​ Outsourcing ○​ Lower prices ○​ Improve...

Key Points: International Trade Agreements and Organizations 1. Globalization and International Trade ​ Definition: Movement of goods, services, technology, investment, ideas, and people worldwide. ​ Positive Effects: ○​ Outsourcing ○​ Lower prices ○​ Improved human rights ○​ Increased productivity ○​ Innovation ○​ Better jobs ○​ Increased capital flow ​ Negative Effects: ○​ Lost Canadian jobs ○​ Fear of job loss ○​ Loss of productivity ○​ Exploitation of cheap labour ○​ Increased pollution ○​ Unhealthy products ○​ Spread of disease ○​ Widening income gap ○​ Influence of multinational corporations on governments Globalization Strategies 1.​ Global Strategy: Uniform products/marketing worldwide, benefits from economies of scale, ignores local culture. 2.​ Multidomestic Strategy: Customizes products/services for local culture, reduces political complications, minimizes exchange-rate risk. 3.​ Transnational Strategy: Mix of global and multidomestic strategies—manufacturing in cost-effective locations, localized marketing and HR. 2. Trade Agreements ​ Definition: Treaties between countries to facilitate trade by reducing barriers and encouraging investment. ​ Types: ○​ Multilateral: Involves three or more countries.  ○​ Bilateral: Between two countries. Key Trade Agreements ​ NAFTA (North American Free Trade Agreement) ○​ Launched in 1994 between Canada, U.S., and Mexico. ○​ Eliminates tariffs/trade barriers, promotes fair competition. ○​ Advantages: Increased trade, higher-paying jobs in Canada, better access to resources. ○​ Disadvantages: Job losses to Mexico, Mexican farmers unable to compete, foreign corporate takeovers. ​ Tax Treaties: Prevent double taxation and tax evasion between countries. ​ European Union (EU) ○​ Established in 1993, includes 27 countries. ○​ Has a common currency (euro), shared financial and security policies. ○​ Pros of a Common Currency: Larger market, price transparency, reduced exchange-rate risks. ○​ Cons: High implementation costs, loss of national control, risk of losing cultural traditions. 3. Trade Organizations ​ Definition: Groups that facilitate free trade globally or help domestic businesses enter foreign markets. Major Trade Organizations ​ World Trade Organization (WTO) (1995) ○​ Promotes global trade liberalization. ○​ Handles trade negotiations and dispute resolution. ​ Asia-Pacific Economic Co-operation (APEC) (1989) ○​ 21 Pacific Rim countries work together to improve trade and economic growth. ​ Group of Eight (G8) ○​ Members: France, U.S., Canada, U.K., Italy, Germany, Japan, Russia. ○​ Focuses on economic growth, trade, and developing countries. ​ Group of Twenty (G20) ○​ Formed during 1990s economic crisis. ○​ Goals: Economic growth, reducing trade barriers, financial institution reforms. ​ Organization for Economic Co-operation and Development (OECD) ○​ 34 member countries, established in 1961. ○​ Works to prevent fraud, bribery, and money laundering. ​ World Bank ○​ 186 member countries.  ○​ Provides loans/grants for education, infrastructure, health, and economic development. ​ International Monetary Fund (IMF) ○​ Promotes financial stability and prevents economic crises. ○​ Provides loans, technical training, and economic policy guidance. 4. The Role of the United Nations (UN) in International Business ​ Main Purposes: ○​ Maintain global peace. ○​ Promote international cooperation. ○​ Fight poverty, hunger, and disease. ○​ Act as a hub for global development efforts. ​ Influence on Business: ○​ Manages economic initiatives through the IMF, World Bank, and International Labour Organization (ILO). ○​ Focuses on global economic stability, trade, and poverty reduction. Purpose of the UN in International Trade The United Nations (UN) plays a significant role in shaping international trade through its global influence, economic policies, and specialized organizations.