Basis of IB Anish Kumar
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Transcript of Basis of IB Anish Kumar
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Presentation on
Basis for International Trademade by
Anish Kumar
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The basis for international trade is that a
nation can import a particular good or
service at a lower cost than if it were
produced domestically
In other words, if you can buy it cheaper than
you can make it you buy itThis maxim is true for individuals and nations
This is called specialization and exchange
The Basis for International Trade
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We have been a major exporter of wheat, corn, and
soybeans since colonial times
Initially, we had an abundance of land
Eventually we came to have a tremendous stock of farm
equipment We used to be a major exporter of steel and textiles
Now other nations produce these more cheaply
Examples
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The North American Free Trade
Association (NAFTA)
The European Union (EU)
The General Agreement on Trade and
Tariffs (GATT) The World Trade Organization (WTO)
World Trade Agreements andFree Trade Zones
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NAFTA was ratified by Congress in 1993
NAFTA created a free trade area thatincludes Canada, the United States, and
Mexico
Agreements on services, investment, intellectual
property rights, agriculture, and strengthening of
trades rules were included
There were also side agreements on labor
adjustment provisions, protection of environment,
and import surges
NAFTA
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This free trade association of 15
nations was formed in 1992 Freight was now able to move anywhere
within the EU without checkpoint delays
and paperwork
So-called quality codes were ended Workers from any EU country could work
in any other member country
The European Union
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GATT was drafted in 1947 and since been
signed by more than 146 nations The latest version was ratified by Congress in 1994
Reduces tariffs worldwide by an average of 40%
Lowers other barriers to trade such as quotas on
certain products Provides patent protection for American software,
pharmaceuticals, and other industries
The General Agreement on Tradeand
Tariffs (GATT)
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The WTO was set up in 1995 as a
successor to GATT
The WTO is based on three major
principles
Liberalization of trade Nondiscrimination
No unfair encouragement of exports
The World Trade Organization
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Under the most-favored-nation principle,
members of WTO must offer one member
the same trade concessions as any other
member.
This is a lot like when the teacher says that ifyou bring candy to class, you must bring
some for everyone
Nondiscrimination:The Most-Favored-Nation
Principle
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Thank you