Period: 1 - January/February 2004
Time: Tuesday/Thursday 14:00-16:00
Location: Henry Angus Building, Room 321 [MBA Core Room]
Instructor: Prof. Werner Antweiler
Office: Henry Angus Building, Room 264
Phone: +1-604-822-8484

Download the course outline for the Jan/Feb 2004 period [PDF file]

Objective & Overview

This MBA module introduces the international trading environment. The objective is to gain an understanding of the forces that determine the pattern of trade (who exports what to whom?) and of the actions governments and firms may take to alter them. This MBA module focuses on exporting and importing, as well as basic aspects of international finance. The closely-related BAIM 501 module in period 2 focuses on the particular role of multinational enterprises and foreign direct investment.

International trade is about location advantages and the specialization in production, thus exploiting country differences in productivity, factor endowment, and production scale. We will first look at international trade from the perspective of economic theory, and then proceed to the formulation of business strategy by identifying the specific opportunities and risks created by the international trading environment. Michael Porter's model of competitiveness in the international business environment provides a unifying perspective on these issues. This module also explores how location advantages may be offset by higher transaction costs or location-specific risks. In addition to the determinants of international trade, this module also covers basic aspects of exchange rate determination and international finance, as well as basic principles of international trade law. Related modules (BAIM 502 and BAIM 503) cover these two topics in greater depth, while BAIM 500 provides a general introduction and overview of the key issues.

As the international trading environment is characterized by a significant degree of government involvement through trade law and trade policy, we will identify the instruments of government interference and assess their impact on the international business. While the last 40 years have seen an enormous increase in trading opportunities due to reductions in tariffs and non-tariff barriers, there remain many obstacles. The recent surge in protectionism in the United States (e.g., softwood lumber, steel), as well as questions about managing border traffic in a post-9/11 world, have raised numerous new challenges for Canadian businesses.

The last session in this module will look at how e-commerce has changed the international business environment, what kind of opportunities it has created for delivering products and branding services, and what pitfalls have emerged.



There is no textbook for this course. However, the online book Elements of Multinational Strategy by Prof. Keith Head is a compact source of information for both BAIM 500 and BAIM 501, and is thus highly recommended reading. BAIM 500 students are encouraged to selectively print the sections relevant for this module.

Assigned Readings

[ 1] Manufacturing Jobs Are Exiting Mexico
New York Times, November 2002

[2] The Pearl river delta -- A new workshop of the world
The Economist, October 2002

[3] The dumping dilemma: Trade-remedy laws are damaging the world trade system
The Economist, May 2002

[4] Bernard Simon: U.S.-Canada Tomato War Heats Up
New York Times, December, 2001

[5] Bernard Simon: Using Tariffs to Discourage Movie Production Outside US
New York Times, March 2002

[6] Elizabeth Olson: W.T.O. Loophole Allows a Surge in Protectionism
New York Times, June 2002

[7] Jagdish Bhagwati: The poor's best hope: Removing trade barriers is not just a job for the rich
The Economist, June 2002

[8] Paul Krugman: Competitiveness: A Dangerous Obsession
Foreign Affairs, March/April 1994

[A] John Helliwell and John McCallum:
National Borders Still Matter for Trade
Policy Options, July/August 1995

[B] Pankaj Gehmawat: Distance Still Matters: The Hard Reality of Global Expansion
Harvard Business Review 79(8), September 2001, 137-147

[C] Michael E. Porter: The Competitive Advantage of Nations
Harvard Business Review 69(2), Mar/Apr 1991, 73-93

[D] Laurence Hecht and Peter Morici: Managing Risks in Mexico
Harvard Business Review 71(4), Jul/Aug 1993, 32-40

[E] James A. Brander: Government Policy Towards Business, Chapter 8
(The Theory of International Trade Policy), 3rd edition, Wiley, 1996

[F] James A. Brander: Government Policy Towards Business, Chapter 9
(International Trade Policy: Institutions), 3rd edition, Wiley, 1996

[G] Charles W. Hill: International Business, Chapter 15
(Exporting, Importing, and Countertrade), 3rd edition, McGraw-Hill, 2000

[H] Robert E. Kennedy: Exporting IT-Enabled Services from Developing Countries
Harvard Business School Case 9-702-064, May 2002

Note: Due to a technical error at Duplication Services, the reading package section [E] is missing every second page. A replacement set will be handed out in class on Tuesday January 13.

A course package, available from the UBC Commerce Duplication Services Centre, contains selected readings and case studies. Additional minicases will be published as PDF files on the course web site as the course progresses. Lecture notes will be made available after each session, also as PDF files. In case you are looking for more in-depth coverage of specific topics, the following books are highly recommended:



# Date Topic Assigned Readings
and Lecture Notes
1 Tue, Jan 6 session cancelled due to snow conditions  
2 Thu, Jan 8 Introdution: Canada in the Global Economy; Trade Theory (Introduction) Lecture Notes
3 Tue, Jan 13 Trade Determinants: Comparative Advantage and other Theories [E], [1], [2], Notes
4 Thu, Jan 15 Porter's Model; Transaction Costs; Practical Export Pricing [C], [A], [B], [D], [8] Notes, More Notes
5 Tue, Jan 20 International Finance: Theory Lecture Notes
6 Thu, Jan 22 International Finance: Practice Lecture Notes
7 Tue, Jan 27 International Trade Law [4], [5], [6], Notes
8 Thu, Jan 29 Instruments of Trade Policy [F], [3], [7], Notes
9 Tue, Feb 3 Export & Import Strategies [G], Notes
10 Thu, Feb 5 International E-Business [H], Notes and Sample Responses to All Cases
  Thu, Feb 12 Final Exam (HA 321; 14:00-16:00)

Items [1] through [8], and [A] through [H], refer to material contained in the BAIM 500 Reading Package. Numbered items are newspaper and journal articles re-typeset for this course. Lettered items are reprints of textbook chapters, Harvard Business School cases, and journal articles. Lecture notes are made available as PDF files on the day following the session. Access to the lecture notes is restricted to registered students of this course. Access from within the domain only requires a student number. If you access the material off-campus you need an additional password that you can request to be sent to your SIS-registered e-mail address. If your e-mail address is not yet registered in the SIS, please visit the online Student Service Centre and register your e-mail address.



Your grade for this module will determined as the weighted average of your class participation (25%), your written assignment (25%), and your final exam (50%). See below for more information on the assignment and the exam.



The written assignment is modelled on the application for Canada's Program for Export Market Development (PEMD, see the links below), which gives matching grants to assist companies in exploring new export markets. As with the PEMD application, your paper should:

  1. outline the company's mission statement (what the company does). Describe the products and/or services which the company proposes to market;
  2. identify a target country and estimate the potential market size for your product; and
  3. describe possible constraints to export success such as domestic and foreign competition, tariff and non-tariff barriers, consumer preferences, and economic and financial market factors.

In addition, you should explain why, as a Canadian company, you have a competitive advantage in the making of this product. In doing so you should draw as much as possible on the theory developed in class.

The assignment may be written individually or with one partner. It should not exceed about 6-8 pages of text, or about 2,500 words. Subject to approval, you may also work in a team of 3, and in this case the length of the report should be about 10-12 pages and 3,750 words. Given the space constraint, you will have to be very selective in what you include. Demonstrate that you can apply theory taught in class and that you can conduct thorough factual research (document your sources in a reference section at the end of the paper). When using information from web sites, identify the credibility and timeliness of the source.

I have put together a few pointers on a separate export plan information page for this course. This page contains a brief overview of key concepts as well as a list of starting points for your research. Further directions are available from the Industry Canada and DFAIT web pages referenced below.



There will be a 2-hour exam at the end of the module. The exam will be held on Thursday February 12 at our regular meeting time in our reguluar classroom (HA 321).

The final exam consists of two parts, weighted 3/7 and 4/7. The first part contains twelve questions with a total of sixty true/false answers You receive one point for each correct true and each correct false response. (No answer counts as an incorrect response.) On average, each question is associated with five true/false statements, but some questions may have fewer or more. The second part contains four short-answer questions, with each question worth 20 points. Although five short-answer questions will be shown, only four must be answered, and the question you like the least can be dropped. There are 140 points in total in this exam.

Here is a sample exam with answers, courtesy of my colleague Keith Head.

Given the breadth of the material covered in BAIM 500, many of you have expressed a desire for directions that would help you prepare for the final exam. The exam study guide [PDF file; updated February 4, 2004] highlights the learning objectives and key questions for each of the topics we have covered. In general, the exam focuses on the ability to express sound reasoning when making management decisions. The exam is not meant to test your ability to memorize institutional details or mathematical formulae; the few places where calculations are involved are identified in the exam study guide. The lecture notes should provide the basis for your exam preparations. It is essential to understanding the key concepts and how they are applied in the cases we have studied.


Office Hours

My office is located in room 264 of the Henry Angus building. The best time to visit me without an appointment is Friday morning. I encourage students to make appointments if they want to see me. I also encourage the use of e-mail.



None yet.


Useful Links

Below you find an annotated list of web links that cover a wide range of issues related to the international trading environment. The focus has been on practical information that will help you develop an export plan.

EIU Country Reports
For research on the target country, one of the best starting points available is the set of country reports published by the Economist Intelligence Unit, a sister organization of The Economist magazine. You can access the EIU reports online through the UBC Library.

World Trade Organization
The WTO's web site provides mostly legal information. Some of the more useful items on the site include the discussions of anti-dumping rules and subsidies and countervailing duties. Of special interest may be the WTO index of dispute settlement issues. You can also read the original 1947 General Agreement on Tariffs and Trade (GATT) and review all other WTO legal documents.

Government of Canada Sources
The Strategis Guide to Exporting
Strategis is a service provided by Industry Canada. Over the years it has grown into a formidable source of information on international trade issues with a Canadian perspective. The two most information Strategis service follow immediately below.
Trade Data Online (Strategis)
This servie provides a search interface to a wealth of information and trade statistics. Industry Canada provides Canadian and US trade data. Commodity data are available at the internationally comparable 6-digit Harmonized System level. Industry data are also available using Standard Industrial Classification (SIC) codes.
This is the "Team Canada" resource centre. Here you find helpful guides for writing up an export plant. A highly recommended starting point for your course assignment. You should have a look at the page describing how to create a successful export plan and give the interactive export planner a try. Team Canada has also published A Step-by-Step Guide to Exporting.
InfoExport - The Canadian Trade Commissioner Service
The Department of Foreign Affairs and International Trade (DFAIT) has put together a set of country reports and industry sector reports. This complements the information from Industry Canada's web site.
PEMD - Program for Export Market Develoment
This is part of the InfoExport web site.
Department of Foreign Affairs and International Trade
International Trade Links from the DFAIT
Agri-Food Trade Service Online
Trade and marketing information from Agriculture and Agrifood Canada.
Canada Customs and Revenue Agency (CCRA)
The CCRA reports up-to-date border delay times. For learning about customs rules related to exporting, read their A Handy Customs Guide for Exporters, and consult the Canadian Harmonized System Classification Codes. Need to find out appliccable tariffs? Check the CCRA Tariff Wizard. You can also find out about the status of particular anti-dumping and countervailing cases.
Canadian International Trade Tribunal (CITT)
The CITT operates within Canada's trade remedies system. It is an independent quasi-judicial body that reports to Parliament through the Minister of Finance. Its key mandate is to conduct inquiries into whether dumped or subsidized imports have caused, or are threatening to cause, material injury to a domestic industry.
Export Development Canada (EDC)
EDC provides insurance and financing for exporters. They also provide bonding, which provides buyer with a guarantee of the exporter's performance.
This is an electronic leads system of the Government of Canada's International Business Opportunities Centre. Subscribers receive information about emerging export opportunities.

UBC Resources
PACIFIC Exchange Rate Service
This is a popular web service I maintain. It provides daily-updated exchange rates and a database retrieval and plot interface for historic exchange rates
International Financial Statistics
This is the main database of the International Monetary Fund. It provides annual, quarterly, and monthly data for key economic indicators of all IMF member countries. It can be a bit difficult to navigate without the print version.

U.S. Government Resources
CIA World Fact Book
This source provides overviews of all countries in the world.
International Trade Administration (ITA)
The ITA is a branch of the U.S. Department of Commerce
U.S. Government Export Portal
This site provides assistance to potential exports. It features overviews, market reports, links to other U.S. trade promotion agencies, and trade statistics.
A Basic Guide to Exporting
prepared by the U.S. Department of Commerce with the assistance of Unz & Co., Inc.
Bureau of Economic Analysis (BEA)
This is another branch of the U.S. Department of Commerce. On their web site you find up-to-date statistics on the U.S. economy.
U.S Census Bureau Trade Statistics
This site provides free summary statistics for U.S. trade. A more comprehensive database (but unfortunately fee-based) is STAT-USA and its sister service USA Trade Online.

North American Free Trade Agreement
NAFTA Secretariat
This site provides access to all the legal documents, including the full text of the NAFTA agreement

Asia-Pacific Economic Cooperation (APEC)
APEC Tariff Database
The easy way to find tariff information for the APEC member economies. Tariff schedules, concessions, prohibitions.

Miscellaneous Sources
The International Business Resource Connection
A well maintained directory of starting points, from the Business School of the University of Kansas
Canadian NewsWire
This is an up-to-date information service that provides access to the latest information on individual companies in Canada.
Transparency International
If you want to find out about corruption in a particular country, this site provides many insights as well as a ranking called the Corruption Perception Index.
Lex Mercatoria
A very comprehensive web site with text of international treaties and international economic law.
Asia-Pacific Business Canada
This site provides useful comparisons between a number of Asian countries.


© 1997-2003 by Werner Antweiler and University of British Columbia. This page borrows from Keith Head's BAIM 500 web page, which I would like to gratefully acknowledge.