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The World Trading Environment

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World trading patterns

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World trading patterns (cont.)

Top 10 world exporters in merchandise 2009

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World trading patterns (cont.)

% change on previous ear in real !"#$!# and consumer prices

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The reasons countries trade

& 'ow omparativedvantage is chieved* sustained period o+

investment

* lower la,our cost

* proximit to raw materials

* su,sidies to help nativeindustries

* ,uilding expertise incertain -e areas

& uilding ationaldvantage (#orter/1990)* +actor conditions

* demand conditions* related and supporting

industries

* +irm strateg/ structure

and rivalr

Source: Porter (1990) The Competitive Advantage of Nations

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arriers to world trade

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arriers to world trade (cont.)

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arriers to world trade (cont.)

& nitiatives +rom the retton Woodsgreement/ 19* World an- (")

& urrentl 134 mem,er countries& #rovides +inancial and technical help +or the development

o+ poorer countries

* nternational 5onetar 6und (56)& #rovides short7term international li8uidit to countries

with alance o+ #aments di++iculties* World Trade rgani:ation (WT)

& Evolved +rom !TT (treat)

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arriers to world trade (cont.)

& The WT promotes trade ,;

* Wor-ing to reduce tari++s

* #rohi,iting import$export ,ans and 8uotas

* Eliminating trade discrimination

* Eliminating non7tari++ ,arriers

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arriers to world trade (cont.)

& The "oha ound* ommenced 2001* alled the 4?% o+ WT mem,ers are developing countries

& @"As +ace greater ,arriers than "As& Be pro,lem areas 7 textiles C agriculture

* ccounting +or 40% o+ @" exports

* ve.tari++ on textiles are 1?720% against D% on industrialised goods* n E C F agricultural su,sidies G H1 ,illion per da

& Ix annual amount spent , them on aid

& The rugua ound* 104 participants* 5ost complex ever attempted

& 1? sectors& FH1 trillion o+ trade

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The development o+ world trading groups

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MAJOR CHANGES IN THE SINGLE

EUROPEAN MARKET

& emoval o+ tari++,arriers

& emoval o+ technical

,arriers& #u,lic procurement

& 6ree movement o+la,our and wor-ers=

rights& pening up o+

pro+essions

& 6inancial services

& Transport/ haulageand coastal carriage

& ompan law

& 6iscal ,arriers

& The environment

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European Monetary Union

STRATEGIC IMPLICATIONS

& #rice and wage transparenc

& onsumers can shop +or

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TRADE AREAS

& 6T; +ree trade area* F/ anada/ 5exico* World=s richest single mar-et

& 5ercosur; customs union

* ra:il/ #aragua/ rugua/ Jene:uela and rgentina& #E; +orum o+ 21 countries ,ordering the

#aci+ic& FE; +ree trade area (to complete AFTA by 2015?)

7Thailand/ ndonesia/ Fingapore/ runei/ 5alasia/#hilippines/ Jietnam/ 5anmar/ am,odia and @aos