International Business – Many of our clothing items are not made in Canada.

That is because
manufacturing of clothing is no longer a very big industry in Canada.

 A Domestic Transaction – is the selling of items produced in the same country

 International Transaction – is the selling of items produced in other countries
 Foreign Trade – involve creating, shipping, and selling goods and services across national
borders. By participating in international transaction, you are contributing to a global
economy.

Benefits of International Trade – Access to Markets, Cheaper Labour, Increased Quality of Goods,
Increased Quantity, and Access to Resources

Five Major Reasons of doing Business Internationally – Product, Price, Proximity, Preference and
Promotion

Cost of International Trade:

 Offshore Outsourcing – is the practice of hiring service providers from countries where labour
costs are lower to complete, some or all of the steps in production
 Human Right Issues and Labour Issues – This is a problem that is resulted from Offshore
Outsourcing. Workers in many poor countries face a wide range of abuses in the workplace (e.g.,
abuses include labour exploitation, including physical and sexual abuse, forced confinement,
denial of food and health care, and excessive work hours with no rest days).
 Sustainable Development (Irrelevant Point) – is a process of developing land, cities, businesses,
and communities that meets the need of consumers without compromising the ability of future
generations to meet their needs
 Environmental Degradation – occurs when nature’s resources such as trees, habitat, earth,
water, and air are being consumed faster than nature can replenish them.

Tariffs – also called customs duties, are a form of tax on certain types of imports. Tariffs are levied on a
percentage of value basis.

Tariff Barriers – are often the subject of international negotiations, and these trade barriers are
gradually being reduced as countries create trade agreements.

Non-Tariff Barriers – are standards for the quality of imported goods that are set so high that foreign
competitors cannot enter the market.

Excise Tax – is a tax on the manufacture, sale, or consumption of a particular product within a country.

Government mainly uses excise taxes to raise money.

Government uses to encourage consumers to buy Canadian products.

Countries must come to a trade agreement to order to reduce trade barriers. If the countries are just
beginning a trade relationship, this agreement means importing and exporting products.

Canadian Trade Agreements – World Trade Organization (WTO), North American Free Trade Agreement
(NAFTA), and also The Group of Eight (G8) Not as relevant.