Trade makes the world go round. Commercial enterprise surrounds us at all times and affects our own lives as well as the lives of people around the world whom we usually do not consider when we make choices as consumers.
Canada’s imports from Asia, like imports from the rest of the world, are concentrated in the automotive and electronics sectors. Motor vehicles comprise a little more than 10% of Canada’s imports from Asia.
An automotive product is therefore a perfect example of the far-reaching effects of trade. Consider how the production of tires for your vehicle affects lives in Asia, where the rubber is grown and the tires manufactured.
Economic Growth
The Lao government is encouraging commercial and economic growth and development to raise its citizens’ standard of living and expand the country’s global economic position. It has appropriated farmland that was once used to grow food crops and sold it to Chinese companies that replace the farms with large rubber plantations. More than 500,000 hectares may already have been converted to rubber plantations in the uplands of China, as well as in Laos, Thailand, Cambodia, Myanmar and Vietnam. Researchers predict the area of land dedicated to rubber and other farming could more than double or triple by 2050, replacing lands currently occupied by evergreen broadleaf trees and secondary vegetation growing in areas subjected to slash-and-burn farming. The converted land could result in a significant reduction in carbon biomass, dry up the region's water systems and increase the risk of landslides through erosion.
Farmers are being displaced from their land and hired to plant successive crops of rubber trees, but the farmer soon is no longer required, as rubber is tapped only every eight years. He must move to a village and find work, possibly in a factory, which provides income but it is not sufficient. The farmer and his family can no longer grow food and produce goods to sell, so the farmer’s wife must find work, possibly doing small tasks on the rubber plantation or in a factory. They have lost their traditional agricultural-based occupation and lifestyle and have been forced off land that may have been in the farmer’s family for generations. Their new occupations may not sustain them as well as the farm did.
Imports and Exports
The rubber trees are tapped by Lao workers and the rubber is exported to China, where it is processed to make a range of goods, including tires for motor vehicles. Although exports of Chinese goods, and therefore profits, have increased, the proportion of profits put into wages has been dropping for two decades. The proportion of the country's GDP that makes up wages and salaries peaked at 56.5 % in 1983 and dropped to 36.7 % in 2005. The average annual salary paid to workers in China in 2009 was $6,500; it is the 127th lowest average salary worldwide.
The tires are exported to Japan, where they are installed on cars intended for the North American market, one of which eventually arrives in your driveway.
Learn more: China rubber demand stretches Laos