International Business Introduction to Trade

1. International BusinessIntroduction to Trade BBB4M Mr. Taouil

2. Business Business • The manufacturing and/or sale of goods and/or • services to satisfy the wants and needs of • consumers to make a profit. • Transaction: an exchange of things of value.

3. Domestic vs. International Business • Domestic Business • A business that makes most of its transactions within the borders of the country in which it is based. • A domestic business in Canada is owned by Canadians •  relies on Canadian products and services sells products and services to Canadians • International business • The economic system of transactions conducted • between businesses located in different countries.

5. Markets • Domestic market • The customers of a business who live in the country where the business operates. • Foreign market • The customers of a business who live in a different country than the one where the business operates.

6. Five ways for a Business to be considered an International Business • 1. Own a retail or distribution outlet in another country • E.g. • 2. Own a manufacturing plant in another country • E.g. • 3. Export to businesses in another country • E.g. • 4. Import from businesses in another country • E.g. • 5. Invest in businesses in another country. • E.g.

7. Trading Partner • When a business in Canada develops a relationship • with a business in another country, that country becomes a trading partner with Canada. • It is important to note that international trade takes place between businesses, not countries.

8. History of Canada’s Trade •  Explorers from France and England landed in what is • now Canada in the 1600s •  Traded with First Nations people, especially the • Ojibwa and the Cree, for fur and food, then sent • goods back to Europe •  The success of this international business led to the • establishment of colonies and outposts in Canada, • notably the Hudson’s Bay Company- founded in 1670.

9. Trade with the United States •  United States declared independence from Britain in late 1700s •  Needed to become self-reliant •  Invention of steam engine, cotton gin helped rapid • growth of American industry •  Canada supplied raw materials that were needed in • the United States •  United States became Canada’s largest trading • partner—this remains true today

10. Trade with Asia •  Canada began trading with Japan after World •  Japan became known for high-quality • electronics and automobiles •  China has more recently become a trading partner •  Chinese-made products are inexpensive and well made, and popular with North • American retailers

11. Trade with Mexico •  Developed since signing NAFTA in 1994 •  Goods made in Mexico and the United States now • enter Canada duty-free •  Mexico has become one of Canada’s top five trading

12. NAFTA • North American Free Trade Agreement • Enacted on January 1, 1994. • Allows for trade between Canada, United States, and Mexico by eliminating or reducing tariffs. • Tariff: a tax on imports or exports. Therefore, Canada no longer has to pay tax on imports from the U.S. Or Mexico.

13. Imports and Exports • Imports: good brought into a country from another country. • E.g. BMW is an imported Vehicle from Germany. • Exports: items made in Canada and shipped to other countries to be sold. • E.g. Tomatoes grown in Leamington are shipped to United States for Sale. • Net Exports: Total Exports-Total Imports for a country. :

14. Canada’s Main Imports and Exports • Imports: Cars, consumer electronics, machinery. • Exports: Petroleum Products, Cars. • Net Exports: 435 Million.

15. Benefits of International Trade

16. Drawbacks of International Trade