Chapter 5.3

Chapter 5.3 Worksheet

• Free trade supports what and eliminates what?

Chapter 5.3 Worksheet

• Free trade supports what and eliminates what? – Free trade supports the free flow of goods

and services, workers and investments in a region

– Free trade eliminates or reduces tariffs, duties, and other barriers

Chapter 5.3 Worksheet

• Bilateral Trade– Trade agreement between 2 nations– Example US-Canada free trade agreement in

1988

• Multilateral Trade– Trade agreement between more than 2

nations– NAFTA-1992

Chapter 5.3 Worksheet

• A certificate of origin is a document that contains an affidavit to prove the origin of the imported good, what would happen under NAFTA if a company forged this certificate?

Chapter 5.3 Worksheet

• If companies make incorrect statements on the certificate of origin, their NAFTA privileges may be suspended

Chapter 5.3 Worksheet

• How does a product qualify as a NAFTA product?

Chapter 5.3 Worksheet

• How does a product qualify as a NAFTA product? – For a product to qualify as a NAFTA product,

it must have been at least 50% produced at a manufacturing plant in the region and be composed of materials & components from the region

Chapter 5.3 Worksheet

• If the US started to import from Mexico more, how would this affect Canada?

Chapter 5.3 Worksheet

• If the US started to import from Mexico more, how would this affect Canada? – Loss many jobs– Gov’t would collect less taxes which would

mean less services for Canadians, less money for Gov’t employees including nurses, doctors, teachers etc.

Chapter 5.3 Worksheet

• What can Canada do to sustain its trade position with the US?

Chapter 5.3 Worksheet

• GDP grew in the Americas from 1990-2000, what was major drawback?

Chapter 5.3 Worksheet

• GDP grew in the Americas from 1990-2000, what was major drawback? – The number of people in poverty grew– While the wealthy nations repeated most of

the benefits (good & cheap products)

Chapter 5.3 Worksheet

• What are some of the advantages of EU?

Chapter 5.3 Worksheet

• What are some of the advantages of EU? – Size 380 million consumers– Manufactures have high uniform production

standards– Monetary Union (EU’s central bank)

encourages higher economic performance among its members

Chapter 5.3 Worksheet

• Define and describe APEC

Chapter 5.3 Worksheet

• Define and describe APEC – Asia-Pacific Economic Cooperation (APEC)– Is a forum for ministers and senor Gov’t

officials of countries of countries that bordering the Pacific Ocean to discuss regional policy

– Formed in 1989 to promote trade among its members

– There are more than 20 participating nations

Chapter 5.3 Worksheet

• Why is APEC so attractive?

Chapter 5.3 Worksheet

• Why is APEC so attractive?– Many APEC countries attract business

because they are able to offer “low cost” labour.

– However, the region now offers increasing numbers of highly skilled workers.

Chapter 5.3 Worksheet

• Summarize what happen to APEC nations in 1997

Chapter 5.3 Worksheet

• Summarize what happen to APEC nations in 1997 – Economic crisis in which several currencies

were devalued (corrected) overnight

Chapter 5.3 Worksheet

• Summarize what happen to APEC nations in 1997

Chapter 5.3 Worksheet

• Summarize what happen to APEC nations in 1997 – Canada has been missing out on

opportunities to trade and invest in Asia because it is to focused on the US market.

Chapter 5.3 Worksheet

• Summarize how Canada has left itself vulnerable in terms of international trade with the US?

Chapter 5.3 Worksheet

• Summarize how Canada has left itself vulnerable in terms of international trade with the US? – Due to NAFTA, Canada is economically

vulnerable because of its dependence on a single market

Asian Crisis

• Summarize what caused this crisis.

Asian Crisis #1

• Main Problem: corruption in the financial and real estate market.

Asian Crisis #1

• Outcome/Symptom: There was an oversupply of office space/buildings. So when investors could not rent out their buildings, they couldn’t make their debt payments to their builders and the builders couldn’t pay their pay their suppliers.

Asian Crisis #2

• Explain why people were against the IMF getting involved?

Asian Crisis #2

• People were against the IMF because they feel that it would be tougher to borrow money based on new restrictions that the IMF would impose.

Asian Crisis #2

• They believe there is nothing wrong with the system and the IMF would just make things worse not better. Also, these people would lose lots of money on their investments with an IMF deal.

• However, “Needs of the many out weight the needs of the few.” John 11:50.

Asian Crisis #3

• List and explain IMF solution and conditions?

Asian Crisis #3

• 56 financial institutions be closed, declared bankrupt, and their assets liquidated to help pay back debts

• Thailand underwent many political, economic and social reforms, including sweeping Anticorruption measures and strengthening of checks & balances systems.

Asian Crisis #3

• An entire new constitution was written and passed, and election laws were reformed.

Asian Crisis #4

• How can a country position itself so a financial crisis doesn’t happen?

Asian Crisis #4

• Countries need checks and balances so that there is not too much money available for people to borrow.

• If banks lend out money on risky investments, they should eat the loss and not the people of that country.

Asian Crisis #4

• Financial restrictions should never be deregulated.

• Restrictions should be in place so that any one person or company does not over borrow (live above their means).