Understanding International Trade: Costs, Benefits, and Agreements

Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific

It has to do with eliminating barriers that are put in place to protect the producers in a country. The barriers that countries implement include tariffs and taxes, quotas, rules and regulations and government subsidies or tax breaks (pg 58). The primary goal of a trade agreement is to lower these barriers so that any international company involved in the agreement(s) can be competitive in another country that is also involved in the agreement(s). One of the key features of the TPP agreement is to eliminate tariffs and some of the other barriers in order to create new opportunities for workers and businesses and to also benefit

One of the reasons Canada is very interested in this agreement is because Canada is the world’s third largest pork exporter. Also involved in the deal is Japan, which is currently the world’s largest pork importer. The cost of producing pork in Japan is more than double the cost it is to produce pork in Canada. Therefore, Japan prefers to imports pork and focuses their production efforts in a different industry, because the opportunity costs are way too high. However, Japan currently is imposing a very high tariff on pork imports and has reached a deal with the Australian government, who only have to pay half the tariff rate. Canada is involved in the deal because they want the Japan to lower the tariffs on Canadian pork, so that they (the Canadians) can be competitive in Japan.
The article goes over the affects this deal has on some local Canadian industries. For example, the author explained that this deal will possibly increase the amount of imported foreign car parts and maybe even dairy products, which could mean a better selection as well as lower prices for consumers but also hurt some workers who operate locally in these businesses. Currently the absence of foreign products in the Canadian dairy market means that there is less selection for a higher price, but this also means that local farming communities can have stable incomes and can be