what is protectionism?
use of tariffs and quotas set by governments on imports
what are tariffs?
taxes added to the cost of imports to make them more expensive to purchasers
what are quotas?
limits placed on the number of imports that may enter a country
what do quotas and tariffs protect countries from?
foreign competitors who import their products and sell them for less than local companies can
what does free trade eliminate?
barriers, such as tariffs and quotas, so that commodities may be sold between countries as cheaply as possible
what is free trade a fundamental part of?
economic globalization that has been an important trend since the late 1800s
what is comparative advantage?
goods produced that are made with better quality and can be sold cheaper than other countries
what do countries that support free trade believe?
goods and services should be shipped without tariffs or quotas
what can happen to domestic industries as a result of free trade, but what is the overall belief?
sometimes domestic industries have to close down, but the belief is that there are more advantages to free trade than fair trade
what is free trade?
a policy in international markets in which governments do not restrict imports or exports
when did Canada and the USA sign the FTA?
what happened in 1994 to the FTA?
it was extended to Mexico, creating the North American Free Trade Agreement
what are the future plans for the FTA?
to expand NAFTA to other north and south american countries
what happens when free trade removes tariffs and quotas?
large-scale foreign manufacturers are able to import their cheaper products without any penalty
what is fair trade based on?
the belief that poor producers and workers in developing countries do not benefit from free trade
what happens under the fair trade system?
producers receive a fair price for their products from fair trade organizations
what do fair trade systems cut out?
the middleman- independant buyers, storage operators, shippers, distributors and large manufacturers
what happens when world prices for commodities drop?
small scale producers frequently get a price for their produce that does not cover production
what role do consumers play in fair trade?
consumers can help protect small scale producers– consumers can buy directly from farmers, artisans, or producer’s cooperatives
what does buying directly from the artisans or producer’s cooperatives do?
ensures more of the money paid for the product is returned to the producers
what are the 8 principles of fair trade?
- producers receive a fair price for their products
- no forced labour / child labour is used
- safe and healthy workplaces are used
- equal employment opportunities are provided for all people, including the disadvantaged
- long term trade relationships are developed between producer and buyer
- financial / technical assistance is available when used
- environmentally sustainable practices are used
- public accountability is espoused in all aspects of trade and production
what is the mission of TransFair Canada?
to improve incomes and living standards of small producers in developing countries by expanding canada’s market for fair trade
what is the difference between fair and free trade products?
fair trade products are more expensive and can usually be found online / in specialty stores
where does fair trade bring the benefit of economic globalization?
into developing countries
what is fair trade?
an organized social movement whose stated goal is to help producers in developing countries achieve better trading conditions and to promote sustainability