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Chap 11 - International Trade

Chap 11 - International Trade. Trends in Merchandise & Agri-Food Trade Inter-regional vs International Trade. language & culture specialized transport services government regulatory differences how prices and exchange rates collide. Trends in Merchandise Trade.

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Chap 11 - International Trade

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  1. Chap 11 - International Trade Trends in Merchandise & Agri-Food Trade Inter-regional vs International Trade • language & culture • specialized transport services • government regulatory differences • how prices and exchange rates collide

  2. Trends in Merchandise Trade Exports and Imports 2002 - 2010 ($CA Million - current) Imports Source: Statistics Canada, CANSIM, table (for fee) 228-0003 228-0043

  3. Source: Statistics Canada, The Daily

  4. Exports of Goods – $million (current) NB - not all sectors represented in table

  5. Imports of Goods – $million (current) NB - not all sectors represented in table

  6. Imports, exports & trade balance of goods, by country 73% 81% Source: Statistics Canada, CANSIM, table 228-0003.

  7. Trends in Agri-Food Trade Canada as an exporter 47% primary (farm) output exported ~ $30 - 35 billion $5 - 6 Billion trade surplus 4th largest exporter of agr products (2009) 3.4% of world exports: EU (48%) US (11%) and Brazil (6%) • Export markets(2009) • United States 50% of agri-food exports • Japan 8% • EU 6%, China 7% • Products: • grains + products (28%) • oilseeds + products (20%), • livestock + products (18%) Source: Agriculture and Agri-Food Canada, An overview of the Canadian Agri-Food System, 2011, Ottawa

  8. 52% Primary 2009 55% Primary 1997 71% of imports are processed (2009)

  9. Canadian Agri-Food Imports Imports (2009) . 2.8% World Imports US is largest source (~ 61% ) EU (13%) , Mexico (4%) Products: fruit & vegetables + processed products (28%) beverages (ex fruit juice) (13%) • Exports vs. Imports • complementary - competitive imports • gains from trade • import sources becoming more diverse

  10. International vs. Interregional Trade Language and culture communications transactions costs (“gifts”) Transportation requirements clear rules of transaction freight costs, load/unload transfer of ownership (incoterms: EXW, FAS, FOB) insurance documentation

  11. Government regulation Phyto-sanitary Transport Food labelling & packaging Import/export agencies Country of origin Transactions Costs International organizations Facilitate trade Bilateral - regional (NAFTA) Multinational (WTO, Codex Alimentarius Commission)

  12. Exchange Rates • Two prices in every trade • another transaction cost • ER volatility (post 1970’s) • significant effects on trade & profitability dealing with exchange rates - fixed versus floating rates Canada vs China - role for forward exchange markets • Canada-US exchange rate - recent history • Jan 2002 (1.60/0.63)

  13. $US per Canadian Dollar 2002 - 2011 60% appreciation Source: Globe & Mail - Globe Investor

  14. $Euro per Canadian Dollar 2002 - 2011 Source: Globe & Mail - Globe Investor

  15. $US per Euro 2002 - 2011

  16. $US per Chinese Yuan Renminbi 1982 - 2011

  17. China Daily, Oct 27, 2011

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