jump to content of this page Bized logo linked to homepage
You are here: Educators > HE Resources > Threshold Concepts > Trade patterns and the Benefits from Trade

Educators
Bookmark and Share

Advanced

Trade Patterns and the Benefits from Trade - Students' Worksheet

Table: Leading Sectors in US Goods Trade with Canada, 2000-2003

 2000200120022003
 Exports (billions of US dollars)
Vehicles (HS 87)32.829.333.335.0
Non-electrical machinery (HS 84)30.627.425.926.0
Electrical machinery (HS 85)18.014.312.311.9
Plastics (HS 39)6.96.66.97.5
Iron and steel (HS 72 & 73)5.85.35.35.6
Precision instruments (HS 90)5.85.34.74.8
Mineral fuels (HS 27)2.63.62.64.0
Paper, paperboard, paper pulp (HS 48)3.73.73.63.8
Rubber and products (HS 40)2.82.62.62.6
Pharmaceuticals (HS 30)2.01.92.12.4
 Imports (billions of US dollars)
Vehicles (HS 87)56.750.752.452.8
Mineral fuels (HS 27)31.434.229.641.3
Wood and wood products (HS 44)10.810.19.910.4
Paper, paperboard, paper pulp (HS 48)10.110.19.39.0
Electrical machinery (HS 85)16.911.19.08.4
Plastics and products (HS 39)6.76.87.07.8
Aircraft (HS 88)4.76.15.36.3
Iron and steel (HS 72&73)5.75.05.65.5
Furniture (HS 94)5.34.94.95.1

Source: Bureau of the Census

Question 1

Study the table above. Work in pairs to decide whether the US gets a net benefit from its trade with Canada.

Stacked Timber

The lumber industry in Canada is a valuable export for that country but the US also sells timber to Canada - how does this tally with our understanding of the advantages of trade? © Photolibrary Group

Question 2

Read the extract 'Lumbering towards a better standard of living?' below. Work in groups to decide the likely effects of Senator Smith's proposal on the different sectors of industry in the US and Canada.

Lumbering towards a better standard of living?

WASHINGTON DC: Today, (March 5th 2003) Senator Gordon Smith (R-OR) urged U.S. Trade Representative Robert Zoellick to pursue a strong and enforceable trade agreement that ensures fair marketing opportunities for lumber producers. Smith raised his concerns at a Senate Finance Committee hearing. Yesterday, Smith met personally with Ambassador Zoellick to stress the importance of trade laws and remedies with regard to the U.S.-Canadian softwood lumber trade.

"The Bush Administration must reach a quick and acceptable settlement with Canada so that our mills stay open, jobs are protected, and a free market is restored," said Smith. "The Canadian government provides anti-competitive supports for its lumber industry which put American producers at an unfair disadvantage. No matter how it is characterized by either side, the US and Canada have very different systems for marketing public timber to private industry."

From Gordon Smith - US Senator's press release

Question 3

How did you work out your answer? What sequence did your discussion follow? What did you consider? What did you reject? Why did you arrive at the conclusion you did?

Follow-up work: task for students.

An economist would use the ideas of opportunity cost and 'knock-on' effects within an economy that produce a new 'general equilibrium' to analyse the effects of Senator Smith's proposals. Look at the analysis carried out by Francois and Baughman (2004) (US-Canadian Trade and US State-Level Production and Employment, available here) and identify whatever examples you can of these ideas being used in their argument. Do they reach the same conclusions as you? Do they try to reach their conclusions in the same way as you?

| Index | Previous | Next |