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- International trade is the exchange of
capital, goods, and services across
international borders or territories
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Understand the reasons for
trade

- DOMESTIC NON-AVAILABILITY: a nation
trades as it lacks raw materials, climate,
specialist labour, capital or tech needed to
manufacture a particular good
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Discuss the ADVANTAGES of
Trade

- Specialization is concentrating on the production of goods &
services that a country is best at
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- Increased competition leads to an efficient allocation of
resources
- lower prices for consumers
- greater choice for consumers: they have access to variety of
goods & services from different producers across globe
- Allows for consumption of goods not otherwise available

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In
some cases there's one major export
- Unemployment
- Externalities: increase in world trade has
caused more pollution where & increased
external costs from transport (air & sea) of
finished goods, components & raw materials

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Imposing tariffs
often results in affected overseas countries imposing tariffs of their won in retaliation
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Explain the methods of
protectionism (Trade Barriers)

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This is a physical limit on the volume of an imported good allowed into a
country
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Explain methods of
protectionism (Non-tariff barriersQuota)

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Explain the methods of
protectionism (Non-tariff barriersEmbargo)

This is a ban on importation of a
product from overseas
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Explain the methods of
protectionism (Non-tariff barriersAdministrative barriers)

Administrative barriers, including
quality controls, standards &
licensing requirements for
imported products
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Discuss the reasons FOR
Protectionism

- To protect infant industries (protecting new firms from overseas competition
gives them time & chance to develop, grow more globally competitive)
- To protect declining industries (protection from overseas competition will
help slow down rate of decline in & loss of jobs from some major industries)
- To protect jobs
- To prevent overseas producers from selling goods that are harmful or
undesirable
- To protect domestic firms from dumping (Involves one country 'flooding'
another with product at a price significantly below its market price to force
rival producers out of business)
- To correct trade imbalance (If country has large current account deficit, a
gov may use protectionism to reduce amount of imports coming into a
country)

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Consumer choice also limits)
- Retaliation (where one country imposes
protectionist policies in reaction to
another country that has done the same)

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E
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NAFTA
& Asean

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g
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Discuss the Disadvantages of
Trading Blocs for members

- Some nations favour global free trade & feel
trading blocs only create regional trade
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Disadvantages of trading bloc
for non-members

- Face common trade barriers when selling
goods to member of trade bloc e
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their
goods are at higher price due to tariffs
- Firms within trade bloc may start to
specialise & produce same goods
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Explain the role of the WTO
(World Trade Organisation)

- Reduce/eliminate trade barriers
- Monitoring the application of the WTO's
rules for trade
- Monitoring & reviewing trade policies
- Settling trade disputes
- Helping new members join
- WTO only justifies use of protectionism
when nation is found to be dumping

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