INTERNATIONAL TRADE. MK, UNIT 27 Reader, p.2 0 - 23. Match to get OPPOSITES. Free trade Developing country Developed industry Competitive Import Deficit. Surplus Uncompetitive Advanced/developed Developing/underdeveloped/infant Protectionism Export.
MK, UNIT 27
(tarrifs, quotas and subsidies)
Customs difficulties and delays
Custom difficulties and delays
It allows specialization.
It strengthens absolute/comparative advantage.
It makes import more expensive.
It provides access to more markets.
It prevents dumping.
It breaks down barriers between the peoples and nations
It protects domestic industries (esp. strategic / infant industries).
It allows freer movement of resources.
It adds costs to consumers.
It increases international competition and efficiency.
It guarantees consumers the lowest possible prices
IFREE TRADE or PROTECTIONISM?
The only global international organization dealing with the rules of trade between nations.
At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments.
The goal is to help producers of goods and services, exporters, and importers conduct their business.
An international organization created for the purpose of: 1. Promoting global monetary and exchange stability.2. Facilitating the expansion and balanced growth of
international trade.3. Assisting in the establishment of a multilateral system of payments for current transactions.
The IMF plays three major roles in the global monetary system.
GRANT A LOAN
REPAY A LOAN
RESCHEDULE A LOAN POSTPONE A LOAN
PAY INTEREST REPAY THE PRINCIPAL
RENEW A LOAN ROLLOVER A LOAN
READINGPROTECTIONISM AND FREE TRADE RB, p.20, 21
Read paragraphs 1 & 2 to explain:THE COMPARATIVE COST PRINCIPLEABSOLUTE/COMPARATIVE ADVANTAGE(REASONS & EXAMPLES)
Read paragraphs 3, 4 & 5 to explain:PROTECTIONISM AND REASONS FOR PROTECTIONISMTYPES OF TRADE BARRIERS
FREE TRADE: GATT AND WTO
OPPOSITION TO FREE TRADE
Read paragraphs 8 & 9 to explain:
PROBLEMS & FEARS OF DEVELOPING COUNTRIES (IMF)
THE POSITIVE EXAMPLE OF THE “ASIAN TIGERS” COUNTRIES
in the production of goods
economies of scale
COLLOCATIONS: WHICH VERB IS MISSING?
r_______ the living standard
p ______ strategic industries
r_______ a balance of payments deficit
d________ or w________ competitors
r________ against restrictions
a_________ economies of scale
s______ a limit to imports
g______ favourable conditions
p_____ the interest
r______ the principal
r______ (renew) a loan
r _________ (postpone) repayments
Fill in the gaps:
An _________advantage exists if a country can ________ something more ______ than anyone else. Examples are: _______ from Saudi Arabia, _______ from Canada and ____ from Brazil.
Cheaply, absolute, produce, coffee, timber, oil
A country has a comparative ______ for ______ that it can make more _______ or ______than other goods. China has low ________ costs. It gives it comparative advantage. In producing labour- intensive goods such as ______ and _____.
Better, shoes, goods, labour, textiles, advantage, cheaply
BALANCE OF TRADE (trgovinska bilanca)
-the ___ in value between the products a country ____ and those it ____.
imports, exports, difference
If a country exports more than it imports it has a ______ ______.
If a country imports more than it exports, it has _____ _____.
BALANCE OF PAYMENTS (PLATNA BILANCA)
It is a comparison between total receipts and payments arising from a country’s international trade in goods, services and financial transactions
Visible trade is trade in goods, physical things you can touch and weigh :
Food and produce
Invisible tradeis trade in services like:
E. Visible exports for Germany.
F. Invisible export for Spain.
KEY: 1 B 2 F 3 C 4 E 5 A 6 D
VOCABULARY:TRADE SURPLUS ≠ TRADE GAP/deficit
TRADE SURPLUS→ when the export is bigger than import
TRADE GAP → when the import of goods and services is
bigger than export
EXPLAIN THE FOLLOWING NEWS HEADLINES:
“China trade surplus widens in January”
“The US trade gap narrowed to $58.2bn in November”
“U.S. trade gapwidens in April”
imports keep rising over exports
exports start rising
exports keep rising over imports
For and against free trade (MK, p. 134-5)
Which set of arguments regarding free trade and the policies of WTO do you find the most convincing?
HOMEWORK: Read on international trade and protectionism in our materials, watch and read to inform your opinion on the positive and negative effects of free trade and globalization.
Pick a side in the debate will hold on Friday.
The topic: Free trade is the only form of fair trade.
Noam Chomsky on Globalization:
Further interesting videos and presentations:
HW: Reading & writing:
Education and protection, MK p 133
Read and answer the questions in writing (in detail).