6.6 Key Terms, References, and Accessibility Descriptions

Key Terms

Economies – countries

Export – Sending the goods from originating country.

Exporters – A person or organization that sells products and services in foreign countries that are sourced from the home country.

GDP – Gross Domestic Product

Import – Receiving the goods in destination country.

Importers – A person or organization that sells products and services that are sourced from other countries.

International Trade – Bi-lateral or Multi-lateral exchange of goods and services.

Merchandise Trade – Trade in goods only

Multinational Trade Pacts – Trade policies between multiple nations

Storage – The act of storing something in a warehouse.

Tariffs – Tax or duty paid on exports/ imports.

Transportation – The entity handling the physical transportation of the goods, such as UPS, FedEx, and DHL.

World Trade Organization – WTO is a global organization that outlines rules to trade and all the member nations are bound to follow these rules.


Coyne, A. (2012, Mar 16). Andrew Coyne: Canada at the crossroad of trade. National Post. http://webarchive.loc.gov/all/20120324082649/http:/fullcomment.nationalpost.com/2012/03/16/andrew-coyne-canada-is-poised-to-win-front-door-access-to-a-billion-person-market/.

Customs-Trade Partnership Against Terrorism. (2022, May 10). In Wikipedia. Retrieved on May 10, 2022, from https://en.wikipedia.org/wiki/Customs-Trade_Partnership_Against_Terrorism#cite_note-C-TPAT_Achievements-1.

Export Development Canada (EDC). (2018, Jan 03). What are the benefits of Canada’s Trade Agreement?. https://www.edc.ca/en/article/benefits-of-canadas-trade-agreements.html.

Foreign Trade Online. (n.d.). HS Codes. https://www.foreign-trade.com/reference/hscode.htm.

Free and Secure Trade. (2021, Oct 17). In Wikipedia. Retrieved on May 10, 2022, from https://en.wikipedia.org/wiki/Free_and_Secure_Trade#cite_note-3.

Free Trade Agreements of Canada. (2022, Apr 8). In Wikipedia, Retrieved on May 10, 2022, from https://en.wikipedia.org/wiki/Free_trade_agreements_of_Canada.

Government of Canada. (2008). Customs self assessment program. https://cbsa-asfc.gc.ca/prog/csa-pad/menu-eng.html.

Government of Canada. (2020). Single Window Initiative. https://cbsa-asfc.gc.ca/prog/sw-gu/menu-eng.html.

Government of Canada. (2021). Free and Secure Trade. https://www.cbsa-asfc.gc.ca/prog/fast-expres/menu-eng.html.

Government of Canada. (2022). Partners in Protection. https://cbsa-asfc.gc.ca/security-securite/pip-pep/menu-eng.html.

Government of Canada. (n.d.). Canada-ASEAN Free Trade Agreement. https://www.international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/asean-anase/fta-ale/negotiations-negociations.aspx?lang=eng.

Government of Canada. (n.d.). Canadian customs tariff. https://cbsa-asfc.gc.ca/trade-commerce/tariff-tarif/menu-eng.html.

Greenlaw, S. A. & Shapiro, D. (2017). Principles of economics (2nd ed.). OpenStax. https://opentextbc.ca/principlesofeconomics2eopenstax/chapter/absolute-and-comparative-advantage/. CC BY 4.0.

Harmonized System. (2022). In Wikipedia. Retrieved on May 10, 2022, from https://en.wikipedia.org/wiki/Harmonized_System#:~:text=From%20Wikipedia%2C%20the%20free%20encyclopedia%20The%20Harmonized%20Commodity,of%20names%20and%20numbers%20to%20classify%20traded%20products.

Hart, M. (2002). A trading nation: Canadian Trade Policy from colonialism to globalization. University of British Columbia Press.

IncotermsExplained.com. (n.d.). The Incoterms rules. https://www.incotermsexplained.com/the-incoterms-rules/incoterms-2010-rules/.

Kingston, B. (2017, Dec 19). Canadian Free Trade Agreements and why they are important. Export Development Canada (EDC). https://www.edc.ca/en/blog/importance-of-canadian-free-trade-agreements.html.

Lowe, D. (n.d.). Incoterms® 2020 vs 2010: What’s changed?. ICC Academy. https://icc.academy/incoterms-2020-vs-2010-whats-changed/.

OECD. (2018). Trade facilitation and the global economy [Report]. https://read.oecd-ilibrary.org/trade/trade-facilitation-and-the-global-economy_9789264277571-en#page1.

Office of the Press Secretary. (2002, September 9). United States – Canada Free and Secure Trade Program the FAST Program [Press Release]. The White House.  https://georgewbush-whitehouse.archives.gov/news/releases/2002/09/text/20020909-3.html.

Saylor Academy. (2012). International economics: Theory and policy (v.1.0). Saylor Academy. https://saylordotorg.github.io/text_international-economics-theory-and-policy/s12-10-economic-integration-free-trad.html. CC BY-NC-SA 3.0.

Suraraska, J., Amchang, C. & Sawatwong, N. (2020). Decision Making on Incoterms 2020 of Automotive Parts Manufacturers in Thailand. Journal of Asian Finance, Economics and Business, 7(10), 461 – 470. https://doi.org/10.13106/jafeb.2020.vol7.no10.461. CC BY-NC 4.0.

Thompson, B. (2020, Jan 20). Incoterms® 2020 explained – The complete guide. IncoDocs. https://incodocs.com/blog/incoterms-2020-explained-the-complete-guide/.

Trade Facilitation Implementation Guide. (n.d.). The Single Window Concept. https://tfig.unece.org/contents/single-window-for-trade.htm.

Trade Facilitation Implementation Guide. (n.d.). Trade facilitation – principles and benefits. https://tfig.unece.org/details.html.

Trade Facilitation. (2021). In Wikipedia, Retrieved on May 10, 2022, from https://en.wikipedia.org/wiki/Trade_facilitation.

Wood, G. & Aversa, F. (2019, June 27). Procurement contracts and INCOTERMS; How to ensure your supply contracts are not INCO-mpatible with INCOTERMS [Newsletter]. Baker McKenzie. https://bakerxchange.com/rv/ff004dd8f77a5993d00ea4f3f74ea2724a0b192d/p=6104317.

Zurkow, M. (2016). A Guide to the Harmonized System. Punctum Books. https://library.oapen.org/viewer/web/viewer.html?file=/bitstream/handle/20.500.12657/25497/1004598.pdf?sequence=1&isAllowed=y. CC BY-NC-SA 4.0.

Image Descriptions

Figure 6.1: The chart shows different Incoterm Rules and provides information about responsibility, cost and risk involved. The entire breakdown is explained in Media 6.1 video below this chart. [Return to image].

Figure 6.2: The image shows trade process where documents journey starts with port authorities and ends with regulatory agencies. Departure and arrival documents pass through the same process in two different countries to finally reach regulatory agencies making the process slow, costly, complicated, unpredictable and inefficient. [Return to image].

Figure 6.3: The image shows the functioning of single window system where documents are submitted once to the single window and are used whenever required by different authorities and government offices in importing and exporting countries. [Return to image].

Figure 6.4: The image shows 6-digit HS code classification for product Rice. As you go deep into the classification, products can be defined more specifically. In the figure there is an example for product rice. Its classification starts with the section, moving down to Chapter (2-digit), headings (4-digit) and subheadings (6-digit). For rice, it is a part of Section II (vegetable products), Chapter 10 (Cereals), Heading 10.06 (Rice) and subheading 1006.30 (Semi-milled or wholly milled rice, whether or not polished or glazed. [Return to image].

Alternative Text-Based Activities

Check Your Understanding: Incoterms Rules

Question 1:

What does Incoterms stand for:

  • International Commerce Terms
  • International Commercial Terms (Correct)
  • Interactive Common Terms
  • Innovative Commercial Terms

Feedback: Incoterms stand for International Commercial Terms.

Question 2:

Incoterm Rules 2020 are divided into four groups (____________) which consist of _____ terms.

  • (A, B, C, D); 14
  • (P,X,S,U); 7
  • (C, F, A, W); 10
  • (C,D,E,F); 11 (Correct)

Feedback: Incoterm Rules 2020 are divided into four groups (C, D, E, F), which consist of 11 terms.

Question 3:

In which two Incoterms Rules, seller must pay for insurance?

  • EXW and DAP
  • FOB and DDP
  • FAS and DAP
  • CIF and CIP (Correct)

Feedback: There are only two incoterms rules out of 11 for which seller must pay for insurance and they are CIF and CIP where ‘I’ stands for insurance.

Question 4:

Out of the following options, which incoterms rules is NOT multimodal?

  • FCA
  • CPT
  • DDP
  • CIF (Correct)

Feedback: CIF (Cost, Insurance and Freight) is single modal which applies only to sea and inland waterways.

Question 5:

Out of the following options, which incoterms rules is NOT single modal?

  • FAS
  • CFR
  • DAP (Correct)
  • CIF

Feedback: DAP (Delivered at Place) is multimodal which applies for land, air and waterway transportation. [Return to activity].

Check Your Understanding: Trade Facilitation and Promotion

Question 1:

Countries benefit from trade by (Check all that apply):

  • Opening their economies to foreign goods, services, and finance (correct)
  • Making their domestic markets more competitive (correct)
  • Protecting domestic industry by reducing competition (Incorrect)

Question 2:

Economic Integration can be in the form of Preferential Trade Agreements, Free Trade Areas, Customs Union, Common Market, Economic Union and Monetary Union.

  • True (Correct)
  • False

Question 3:

USMCA (previously NAFTA is an example of a free trade area and include these three countries:

  1. *US*
  2. *Canada*
  3. *Mexico*

Question 4:

What is the difference between Customs Union and Common Market. Fill in the blank to show your understanding:

A *customs union* occurs when a group of countries agrees to eliminate tariffs among themselves and set a common external tariff on imports from the rest of the world whereas A *common market* establishes free trade in goods and services, sets common external tariffs among members, and also allows for the free mobility of capital and labor across countries.

Question 5:

By 2030, two-thirds of middle- class consumers will be in Asia, which can create new trade opportunities for Canadian companies.

  • True (Correct)
  • False

Question 6:

Partners in Protection is a program led by the U.S. whereas Customs Trade-Partnership against terrorism is a trade program led by Canada.

  • True
  • False (Correct)

[Return to activity].

Check Your Understanding: Trade Harmonization

Essay-Based Question

Select a product importing to Canada. Using examples above, use Canada’s Customs Tariff Schedule to find it’s HS Code at 2-digit, 4-digit, 6-digit, 8-digit and 10 digit levels. Also, specify the tariff arrangement for that product.


Let’s consider a product: Umbrellas

When looked into Customs Tariff Schedule, It was in Chapter 66 – Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof.

When researched further, we were able to find it’s HS Code:

2-digit: 66 (Chapter 66 – Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof)

4-digit: 66.01 (Umbrellas and sun umbrellas (including walking-stick umbrellas, garden umbrellas and similar umbrellas)

Let’s say now we are looking for Umbrellas that can be used in garden. HS Code will be:

6-digit: 66.01.10 (Umbrellas and sun umbrellas (including walking-stick umbrellas, garden umbrellas and similar umbrellas) – Garden or similar umbrellas



To find Tariff, we need to look into custom’s tariff schedule again.

So, the tariff on our selected product is: 7% MFN Tariff; For CCCT, LDCT, UST, MXT, CIAT, CT, CRT, IT, NT, SLT, PT, COLT, JT, PAT, HNT, KRT, CEUT, UAT, CPTPT, UKT: Free and For GPT: 5%.

[Return to activity].



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