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International Trade

International Trade. BTEC Business. Look at the Trade W/S. What is a “Free Trade Zone”? What do they do? Where are they located? What’s good/bad about them? What are trading blocs? What are import tariffs and why are they used?. Trading Blocs.

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International Trade

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  1. International Trade BTEC Business

  2. Look at the Trade W/S... • What is a “Free Trade Zone”? • What do they do? • Where are they located? • What’s good/bad about them? • What are trading blocs? • What are import tariffs and why are they used?

  3. Trading Blocs • A trading bloc is where a group of nations agree to allow free-trade between themselves but impose tariffs (charges) on other countries who wish to trade with them (E.U). • Some people believe these trading blocs are unfair to non-members as it is more difficult for them to trade.

  4. Trade Barriers • the EU’s internal market is about removing barriers to free movement of goods, services, people and capital • the flow of goods and services in the world economy is also important • organisations have been set up to encourage the removal of barriers to free global trade

  5. EPZ’s And Free Trade Zones • Export Processing Zones: Labour-intensive manufacturing centres that involve the import of raw materials and the export of factory products. • Free Trade Zones: Where manufacturing does not have to take place for trading privileges to be gained (retailing).

  6. Popularity Of EPZ’s... • Problems of Indebtedness. • Open economies. • Multi-National Corporations to locate. LEDC’s Offer... • Trade. • Investment (Big/Small). • Taxation.

  7. Why the stress on free world trade? • The world economy went into a deep depression in the 1930s, as many countries closed their barriers to trade with other states. This led to: • Mass unemployment • Social upheaval • Rise of fascism and the Second World War

  8. How to prevent chaos happening again? • Global powers set up bodies to support international trade • International Monetary Fund • World Bank • All countries encouraged to join these organisations, or face exclusion from benefits of free world trade

  9. What do the IMF and World Bank do? IMF: • Lends to countries with balance of payments problems • Pushes for economic reforms • Reports on policies in member states

  10. What do the IMF and World Bank do? World Bank: • Aims to help development by advising and lending – with many conditions • Countries encouraged to lift import and export barriers, cut subsidies and remove price controls

  11. Criticisms of IMF IMF only lends money if countries agree to: • Sell their resources cheaply • Cut public spending Critics say this serves to increase the problems of poverty in poor member countries

  12. Criticisms of World Bank Loans depend on countries agreeing a ‘Structural Adjustment Programme’ • Leads to rapid increase in price of goods in country • Increases poverty • Lower investment and cut social spending Little evidence that these policies work

  13. What about the World Trade Organisation (WTO)? • The WTO deals with the rules of trade between countries • It developed from the General Agreement on Tariffs and Trade (GATT) • WTO agreements set the ground rules for international commerce

  14. Why so much outrage over globalisation? Other than the criticisms raised earlier, opponents of globalisation point to: • Falling share of world trade taken by developing countries • Subsidies and tariffs set by rich developed economies: USA steel tariffs, EU agricultural subsidies are two of the culprits

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