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TRADE LESSON AIMS: What is trade? How is international trade controlled by certain countries? What are the rules of international trade?

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Presentation on theme: "TRADE LESSON AIMS: What is trade? How is international trade controlled by certain countries? What are the rules of international trade?"— Presentation transcript:

1 TRADE LESSON AIMS: What is trade? How is international trade controlled by certain countries? What are the rules of international trade?

2 "Before you've finished your breakfast this morning, you'll have relied on half the world" Martin Luther King

3 What is trade? Trade is the exchange of goods and services between one country and another. Goods bought into a country are called imports, and those sold to another country are called exports. /development/trade_video.shtml

4 Usually, MEDCs export valuable manufactured goods such as electronics and cars and import cheaper primary products such as tea and coffee. In LEDCs the opposite is true. This means that LEDCs have little purchasing power, making it difficult for them to pay off their debts or escape from poverty The price of primary products fluctuates on the world market which means that workers and producers in LEDCs lose out when the price drops. The price of manufactured goods is steadier which means that MEDCs always benefit.

5 Task One Using the worksheet match the key terms and the definitions. Each one needs to be written out fully in your books.

6 Governments interfere with international trade… Increasing trade and reducing their balance of trade deficit is essential for the development of LEDCs. However, sometimes MEDCs impose tariffs and quotas on imports. Tariffs are taxes imposed on imports, which makes foreign goods more expensive to the consumer. Quotas are limits on the amount of goods imported and usually work in the MEDC's favour. Subsidies are payments made by a government to a producer in its country.

7 Advantages and Disadvantages ADVANTAGES TO MEDCS The price of manufactured goods has increased steadily MEDCs are becoming richer so are able to import more raw materials from LEDCs Competition between LEDCs ensures MEDCs can buy goods for the lowest possible prices. DISADVANTAGES FOR LEDCS The price of raw materials has fallen compared to the price of manufactured goods LEDCs cannot afford to import the manufactured goods they need The price of raw materials is not stable. When there is a surplus, prices fall and LEDCs earn even less Exploitation of raw materials may damage the environment This all increases the dependency of LEDCs on MEDCs

8 Why do rules of trade make it difficult for LEDCs to sell imports into a European Union (EU) country like the UK? UNITED STATES, JAPAN, CANADA AND THE EUROPEAN UNION TARIFFS, QUOTAS AND SUBSIDIES PROTECTING YOUR OWN FARMERS / WORKERS COMPETITION – EU goods v. LEDC goods Think about these things below

9 UNITED STATES, JAPAN, CANADA AND THE EUROPEAN UNION The big problem with trade is that it is mostly controlled by a very powerful group of countries.

10 TARIFFS, QUOTAS AND SUBSIDIES These countries use tariffs, quotas and subsidies for many years to protect their workers and farmers from competition abroad and they have no intention of stopping. PROTECTING YOUR OWN FARMERS / WORKERS

11 COMPETITION – EU GOODS v. LEDC GOODS For many African countries, this system can be very unfair. Products would be very expensive in the UK because when the products are imported into the EU, a tariff would be charged. EU goods would not have this tariff – they could also been given a subsidy to make them even cheaper.

12 What is DUMPING and how is it bad for LEDCs? Because of the subsidies paid in the EU, we often overproduce things – especially certain foods and drinks. This then gets dumped into LEDCs ay prices lower than a farmer could produce it. Cheap food to LEDCs may be considered good – but in reality it puts farmers out of business. In your own words, explain Dumping and why it is bad.


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