INTERNATIONAL TRADE + * EU*

RB, p 45-55

MK, U 27

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

Visible = exchange of goods

Trade

Visible

Invisible Trade

= exchange of services

Visible

Invisible Trade

Counter-(Barter) = direct exchange, without the use of money

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

International TradeRB 45-47

Free Trade

and Protectionism

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