Section 4: Business Challenges and Dissolution of a Business

Lesson 6: Importing and Exporting Goods

International business is simply an extension of domestic business. Countries trade with one another for two major reasons. The first is that few countries are capable of producing everything that consumers want. Secondly, even if a country was to supply all the products required, it might be much more expensive to do so than to import them from another country. Therefore, many countries specialize in producing certain goods based on the availability of resources such as raw material, labour, technology, and climate. This leads to countries wanting and needing to purchase goods from one another.

A country is said to have an absolute advantage if it produces something that cannot be produced in sufficient quantities elsewhere. Such a situation is rare. The notion of international trade is based primarily on the principle of competitive advantage. This means a country should export what it can produce at the lowest cost, and import what it can only produce at a high cost. Canadian imports include manufactured goods (e.g., cars and electronic equipment) and perishable goods (e.g., fruits and vegetables). Some Canadian exports include natural resources (e.g., lumber, oil, natural gas, and food grains) and manufactured goods (e.g., textiles and computer software).

The import and export of goods are subject to a number of federal statutes and the Customs Act and Customs Tariff Act are the most important of these. The first is administrative in nature, while the second serves to set out the various tariff rates and identifies goods that may not be imported into Canada.

Summary

Running a business is not a simple matter. There are many legal requirements business owners need to be aware of. Additionally, because businesses are regulated by all three levels of government, they need to keep abreast of all legislation specific to their type of operation. This is not an easy task, and so it is important to have a close working relationship with a qualified legal adviser.