INTERNATIONAL INTERNATIONAL TRADETRADE

TRADE WITH TWO OR MORE TRADE WITH TWO OR MORE COUNTRIESCOUNTRIES

REASONS FOR FOREIGN TRADEREASONS FOR FOREIGN TRADE

different natural resources climate geographical position

different capital resources - factories - machinery - roads / infrastructure

labour force (skilled / unskilled) greater efficiency a greater variety of goods/services greater output greater employment through expanding

export markets higher living standards (higher income)

PROBLEMSPROBLEMS documentation – more documents foreign languages – labels, leaflets, brochures, instructions foreign currency – debt collection – the language, legal system distance and transportation – extra packaging, time duties and restrictions

FREE TRADEFREE TRADE

Buying goods and services from all countries Buying goods and services from all countries without any barriers when they cross frontierswithout any barriers when they cross frontiers

REASONS FOR FREE TRADEREASONS FOR FREE TRADE ABSOLUTE ADVANTAGE

resources are put to their best possible

use - the highest productivity, the ability to produce more of a good or service than any other country

COMPARATIVE ADVANTAGE

low-cost production – countries produce

more cheaply than others

REASONS AGAINST REASONS AGAINST FREE TRADEFREE TRADE

cheaper production in some countries leads to destruction of industries and jobs in other countries

countries may protect their own industries from international competition

PROTESTS AGAINST GLOBALISATION

TRADE RESTRICTIONSTRADE RESTRICTIONS(PROTECTIONISM)(PROTECTIONISM)

1. TARIFFS - tax or customs duty on imported

or exported goods

2. QUOTAS - the limited amount of goods

3. SUBSIDIES – money paid by the government

reduce the cost of producing

goods to keep prices low

4. EXCHANGE

CONTROL - limiting the amount of local

currency that people can sell or

the price at which they can sell

5. EMBARGO - official order to prevent trade

with another country

VISIBLE TRADEVISIBLE TRADE

VISIBLES:

goods sold / bought

(visible exports/imports)

food, cars, books, furniture….

INVISIBLE TRADEINVISIBLE TRADE

INVISIBLES:

Services / investments

(invisible exports/imports)

banking, education, tourism,

insurance, transportation

THE BALANCE OF TRADETHE BALANCE OF TRADEThe difference between a country’s visible

imports and exports.

The balance is favourable (in surplus) when exports are higher than imports.

The balance is adverse (in deficit) when imports are higher than exports.

or or

Visible exports +48 440 Visible imports -47 322 Balance of trade – surplus + 1 118

Visible exports +47 322Visible imports -48 440Balance of trade - deficit - 1 118

THE BALANCE OF THE BALANCE OF PAYMENTSPAYMENTS

A record of all transactions –goods and services and investments – between one country and the rest of the world overa particular period.

visible + invisible trade

It shows whether the country is making aprofit or loss in its trade

Write the words into the spaces in the sentences:

scale budget deficit quota surplus infrastructure trade barriers globalization WTO balance of trade balance of payments free trade subsidies1. The _____________________has established rules of trade between nations.2. A country exporting more than it imports has a trade ____________________ .3. Countries that export a lot of oil tend to have a positive ________________________ 4. A limit to the quantity of goods that can be importde is a _______________________.5. The import and export of goods is called the _________________________.6. Producing in large quantities becomes cheaper because of economies of _________7. „The world is one big market“ . This is one way of describing __________________.8. The absence of trade barriers is known as ____________________________ .9. Import tariffs and quotas are types of _________________________.10.Buildings, roads, railway lines, telephone netwirks and power supplies are all part of a country's ______________________.11. If government expenditure is higher than government income, the result is a _____________________.12. European farmers receive large sums of EU money in the form of________________

MK: p. 134. Vocabulary – Match up the words and definitions

p. 135. For and against free trade

a) Classify the statements: in favour of / againstb) Which sets of arguments do you find the most convincing?

Trade Justice - why world trade rules need to change

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Play the video. Play the video. Take the quiz. Take the quiz. Answer the questions to the best of your ability. Print your Answer the questions to the best of your ability. Print your results and put them into your portfolio.results and put them into your portfolio.

Why do companies restrict trade?

1._____________________________

2._____________________________

3._____________________________

4._____________________________

5.___________________________