Post on 12-Jan-2016
Trade
• DEFINE “TRADE” USING THESE:activity / buying / selling / exchange / goods /
services / within / between countries
Trade
The activity of buying, selling or exchanging goods and services within a country or between countries. (commerce)
Source: Longman Business English Dictionary
From the country To the country
Visible Visible
Invisible Trade TradeInvisible
Counter-Counter
(Barter) (Barter)
From the country To the country
B A L A N C E
Visible Visible
Trade Trade
Counter- EXPORTS IMPORTSCounter
Balance of trade
(Barter) (Barter)
B A L A N C E
Visible Visible
Invisible Trade TradeInvisible
Counter- EXPORTS IMPORTSCounter
Trade in goods +
Invisible trade (services) =
Balance of payments
(Barter) (Barter)OUTGOING INCOMING
→ RB 2, p 51
Visible
Trade Invisible
IMPORTS Counter
(Barter)
Visible
Invisible Trade
Counter- EXPORTS
Trade surplus
(Barter)
BA
LA
NC
E
Balance of tradeBalance of payments
→ RB, p 45, task I
Visible
Trade Invisible
EXPORTS Counter
(Barter)
Visible
Invisible Trade
Counter- IMPORTS
Trade deficit
(Barter)
BA
LA
NC
E
Balance of tradeBalance of payments
→ RB, p 45, task I
READINGPROTECTIONISM AND FREE TRADE
Read paragraphs 1 & 2 to explain:
THE COMPARATIVE COST PRINCIPLE
ABSOLUTE / COMPARATIVE ADVANTAGE
(REASONS & EXAMPLES)
COMPARATIVE ADVANTAGEThe idea that countries should s________ in making the
products that they are particularly good at making, and should i______ products that other countries are better at making.
Longman Business English Dictionary
• Comparative advantage the advantage that one country has over another because it is better at making a particular product.
Longman Business English Dictionary
• Absolute advantage is the ability of a country to produce a particular good at a lower absolute cost than any other country.
http://www.investopedia.com
pecialize
mport
Absolute or comparative advantage?
• Brazil-coffee• China-shoes
• USA-computers
• Canada-timber
• South Korea –hi-fi
• Absolute• Comparative(low
labour costs)• Comparative
(technologically advanced)
• Absolute• Comparative
(educated labour force, low labour costs)
Collocations from pgs 1 & 2
rai______ living standard
spe______ in the production
c________ advantage ___ producing...
fac______ of production
div_______ of labour
ec_______ of scale
Collocations from pgs 1 & 2
raise living standard
specialize in the production
comparative advantage in producing...
factors of production
division of labour
economies of scale
Free trade vs. Protectionism
• International trade (imports and exports) without government r__________
• Trade of goods and services without trade b_______
• Protection of d________ industries against foreign c________
• Government restrictions are placed on the i______ of foreign competitors
(tarrifs, quotas and subsidies)
estrictions
arriers
omestic
ompetition
mports
HW: PARAGRAPHS 3-5 & TASKS IN THIS PPT
Read paragraphs 3, 4 & 5 to explain:
PROTECTIONISM AND REASONS FOR PROTECTIONISM
TYPES OF TRADE BARRIERS
Reasons for vs. Reasons for TRADE LIBERALIZATION PROTECTIONISM
• spe_______n• a______e/c________e
advantage• a_____s to markets • intern. c________n &
efficiency• efficient market
m_________m• freer m________t of
resources• f______m to choose
• protect jobs (v____s)• protect d_______c ind.• strategic reasons
– i_____t industries
• political p______e• protect culture (?)• r______e• prevent d________g
PRACTICE TALKING ABOUT RESONS FOR BOTH
TRADE BARRIERS
• Tariffs
• Import quotas
• Embargo
• Subsidies
• Non-tariff barriers:
Import substitution
Safety norms
Customs difficulties and delays
Name the trade barrier1. Taxes on imported goods. They raise the price to
customers and make them less attractive.
2. Limits on the quantity of a product that can be imported into a country e.g. 200,000 cars.
3. Laws and safety guidelines.
4. Making it difficult to arrange all certificates necessary to import into a country.
5. When a country produces and protects goods that cost more than those made abroad.
6. Money paid by a government to producers of certain goods to help them provide low-priced goods without loss to themselves.
7. A government order to stop trade with another country.
Barriers to free trade: tariffs, quotas, subsidies, customs duty, import licence,
complicated regulations for documents
WORD PARTNERSHIPS WITH:
TARIFFS• to impose / set a tariff• to place a tariff on sth• to eliminate / lift a tariff• high / low tariffs
QUOTAS• to impose / introduce / lift / set quotas• to increase / raise / reduce a quota• to comply with / exceed quotas
Barriers to free trade: tariffs, quotas, subsidies, customs duty, import licence,
complicated regulations for documents
WORD PARTNERSHIPS WITH:
SUBSIDY• government / state subsidies• to get / qualify for / receive a subsidy• to give / grant / pay / provide a subsidy
CUSTOMS DUTY
the customs duties on foreign cars
Collocations from paragraphs 3, 4 & 5 im________ tariffs & quotas / restrictionspro________ strategic / infant industriesab_________ sectorsl____ to structural unemploymentred________ a balance of payment deficitpr_________ against dumpingdes_______ or wea______ competitorsret________ against restrictionsa_________ economies of scales____ a limit to importspro______ revenue for the government