Lesson 3

Trade Organizations

Introduction

  • Overview of international trade organizations and their significance.

  • Distinction between trade organizations and trade agreements.

  • Discussion of major international trade organizations.

  • Examination of Canada's involvement and future in these organizations.

What are Trade Organizations?

  • Trade organizations are groups of nations that promote the movement of goods (trade).

  • Unlike trade agreements (enforceable treaties), trade organizations aim to:

    • Eliminate trade barriers (tariffs, sanctions, embargoes).

    • Establish fair terms of trade.

    • Encourage foreign investment.

    • Improve the standard of living worldwide.

Major International Trade Organizations

  • World Trade Organization (WTO)

  • Asia-Pacific Economic Cooperation (APEC)

  • Group of Eight (G8)

  • Group of Twenty (G20)

  • Organisation for Economic Co-operation and Development (OECD)

  • World Bank

  • International Monetary Fund (IMF)

World Trade Organization (WTO)

  • Composed of 153 member countries.

  • Aims to liberalize trade and encourage economic prosperity and social development.

  • Evolved from the General Agreement on Tariffs and Trade (GATT).

  • Key functions:

    • Provides a forum for negotiations to address trade disparities.

    • Establishes rules and guidelines for fair and effective trade.

    • Promotes trade through the flow of goods and services.

    • Offers a dispute settlement process (consultation, mediation, and arbitration) for trade disagreements between countries.

  • Key attributes:

    • Protection of intellectual property.

    • Promotes peace through trade relations.

    • Handles dispute settlement.

    • Encourages free trade.

    • Protects the environment.

    • Example: Protection of Roquefort cheese as intellectual property.

Asia-Pacific Economic Cooperation (APEC)

  • Consists of 21 member countries around the Pacific Ocean, including Canada.

  • Represents 40% of the global population, 54% of the globe's GDP, and 43% of international trade.

  • Aims to enhance economic growth and prosperity in the Asia-Pacific region.

  • Objectives:

    • Strengthen the Asia-Pacific community.

    • Promote free trade.

    • Encourage economic and technical cooperation.

    • Facilitate favorable and sustainable business environments.

  • Addresses issues beyond trade, such as climate change, security, terrorism, and emergency preparedness.

Group of Eight (G8)

  • Composed of eight major economies (originally sprang from G6, then G7 when Canada joined in '76, and became G8 when Russia joined in '98).

  • Focuses on solving macroeconomic issues affecting the whole world.

  • Discusses issues such as energy, drugs, information highway, climate control, arms control, crime, and terrorism.

  • Key Attributes:

    • Rotating leadership (each country hosts an annual summit).

    • Example: The G8 summit planned in Russia was canceled due to political controversy.

Group of Twenty (G20)

  • Proposed by former Canadian Prime Minister Paul Martin.

  • Includes 20 major economies, providing a forum for countries not included in the G8 (e.g., China).

  • Addresses major economic issues and resulted from major economic crises in the '90s.

  • Represents 90% of the world's gross domestic product, 80% of international trade, and 66% of the world's population.

  • Purpose:

    • Strengthen economic ties.

    • Focus on economic and employment growth.

    • Eliminate trade barriers.

    • Reform financial institutions.

    • Restructure global financial organizations (IMF, World Bank).

Organisation for Economic Co-operation and Development (OECD)

  • Composed of 34 countries that promote democracy and market economies.

  • Aims for economic growth, employment expansion, improved living standards, financial sustainability, and enhanced world trade.

  • Produces research reports on various countries and economic facets to inform decision-making.

World Bank

  • Provides monetary support for developing countries to:

    • Eradicate extreme poverty.

    • Achieve universal education.

    • Promote gender equality.

    • Improve health (AIDS, child mortality).

    • Ensure environmental sustainability.

    • Develop global partnerships.

  • Offers loans and technical support to developing countries.

International Monetary Fund (IMF)

  • Composed of 188 member countries.

  • Tracks and analyzes economic trends worldwide.

  • Encourages responsible economic policies.

  • Lends money to emerging countries facing economic challenges.

  • Provides technical training in finance (e.g., banking).

  • Warns governments of potential financial problems.

  • Offers a forum for discussion on finance and economics.

Canada's Involvement

  • Canada is involved with all the mentioned trade organizations and has a voice in each.

  • During the last recession, many countries looked to Canada for its effective banking regulations.

  • Canada contributes expertise and provides financial assistance through the IMF and World Bank.

  • Canada promotes trade in the Pacific Rim and plays a significant role in the WTO.

Canada's Future Challenges

  • Questions about Canada's membership in the G8 due to population and economy size.

  • Possible shift from a first-tier to a second-tier country in the G20.

  • Concerns about the extent of Canada's role in the WTO, despite being a major trading nation.

  • Canada is the ninth largest exporter and tenth largest importer, making trade essential to its economy.

Takeaway Question

  • What benefits do Canadian businesses receive from these organizations? How does Canada's involvement with each of these really benefiting the various multinational corporations or even just national corporations in Canada?

  1. Question: What is the role of a trade organization?
    Answer: Trade organizations are groups of nations that promote the movement of goods (trade). They aim to eliminate trade barriers (tariffs, sanctions, embargoes), establish fair terms of trade, encourage foreign investment, and improve the standard of living worldwide.

  2. Question: Discuss Canada’s involvement within the major trade organizations.
    Answer: Canada is involved with all the major trade organizations, including the WTO, APEC, G8, G20, OECD, World Bank, and IMF. During the last recession, many countries looked to Canada for its effective banking regulations. Canada contributes expertise and provides financial assistance through the IMF and World Bank. Canada promotes trade in the Pacific Rim and plays a significant role in the WTO.

  3. Question: Analyze some of the future challenges for Canada with respect to its involvement in the major global trade organizations.
    Answer: Some future challenges for Canada include questions about its membership in the G8 due to population and economy size, a possible shift from a first-tier to a second-tier country in the G20, and concerns about the extent of Canada's role in the WTO, despite being a major trading nation.

  4. Question: Describe the purpose of the following organizations:

    1. WTO

    2. APEC

    3. G8

    4. G20

    5. OECD

    6. World Bank

    7. IMF

    8. OPEC
      Answer:

    9. WTO (World Trade Organization): 120 countries Aims to liberalize trade, encourage economic prosperity and social development, provide a forum for negotiations, establish rules for fair trade, promote trade through the flow of goods and services, and offer a dispute settlement process.

    10. APEC (Asia-Pacific Economic Cooperation): 22 countries Aims to enhance economic growth and prosperity in the Asia-Pacific region, strengthen the Asia-Pacific community, promote free trade, encourage economic and technical cooperation, and facilitate favorable business environments.

    11. G7 (Group of 7): Focuses on solving macroeconomic issues affecting the whole world and discusses issues such as energy, drugs, information highway, climate control, arms control, crime, and terrorism.

    12. G20 (Group of Twenty): Addresses major economic issues, strengthens economic ties, focuses on economic and employment growth, eliminates trade barriers, reforms financial institutions, and restructures global financial organizations.

    13. OECD (Organisation for Economic Co-operation and Development): Aims for economic growth, employment expansion, improved living standards, financial sustainability, and enhanced world trade by promoting democracy and market economies. Produces research reports to inform decision-making.

    14. World Bank: Provides monetary support for developing countries to eradicate extreme poverty, achieve universal education, promote gender equality, improve health, ensure environmental sustainability, and develop global partnerships.

    15. IMF (International Monetary Fund): Tracks and analyzes economic trends worldwide, encourages responsible economic policies, lends money to emerging countries facing economic challenges, provides technical training in finance, warns governments of potential financial problems, and offers a forum for discussion on finance and economics.

    16. OPEC (Organization of the Petroleum Exporting Countries): Canada not a part of it

  5. Question: How have Canadian businesses benefited from Canada’s involvement in trade organizations? Find a specific company example.