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Warmup K9Cxs-uE&feature=related 5 Questions regarding factors of production & comparative advantage. Questions on back.

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Presentation on theme: "Warmup K9Cxs-uE&feature=related 5 Questions regarding factors of production & comparative advantage. Questions on back."— Presentation transcript:

1 Warmup K9Cxs-uE&feature=related 5 Questions regarding factors of production & comparative advantage. Questions on back

2 Answer the Following 1. Do you think Walmart is using fair strategies? Why or why not? 2. What new kinds of jobs might be created as a result of outsourcing? What jobs might be eliminated? 3. Who gains the most from Wal-Mart's price policies? Why? 4. Who has benefited from Wal-Mart? In what ways? Who has not benefited from Wal-Mart? In what ways?

3 2.02 Exemplify how and why nations develop trade barriers and support export activities

4 2.02 Why do some Americans worry about trading with China? American jobs are lost China protects domestic products Difficult for the United States to sell to China Apple, Facebook, Yahoo!, Cisco, Google, & Microsoft have all been targets of Chinese government Manipulate currency rates China prints more of its money & buys US dollars with it This increases the supply of its currency (Yuan) Keeps exports cheap but allows them to stockpile US dollars which in time creates issues

5 2.01 Practice Quiz available online via Edmodo Everyone needs to take it by Friday Key terms Absolute advantage Comparative Advantage Opportunity cost Commodity Factors of production Natural, Human, & Capital

6 Agenda 15 minutes to finalize paper and submit via Edmodo If done take the practice quiz for 2.01 2.02 notes & activity

7 Current Events Workplace Concerns FfIf24SET8 FfIf24SET8 Do you think that employer’s should monitor social media sites of employees?

8 Why limit international trade? Trade barriers – Government placed restrictions on trade Three main reasons to implement trade barriers: Infant industry argument - based on idea that a developing/emerging industry needs time to become globally competitive Allows new companies a chance to compete without the threat of International competition Once it becomes substantial; barriers are reduced

9 Why limit international trade? (con’t) National security argument - based on idea that a country does not want to become dependent upon other countries for products Japan taxes the import of rice to protect domestic farmers Land in Japan could be used for other things; however, Japan would be reliant on other countries for its main food source

10 Why limit international trade? (con’t) Free trade favors rich countries argument – based on idea that large, developed countries have comparative advantages in many areas. Canadians wary of US dominating their media market. France has worked to protect its TV and film industry from US domination

11 Review Main reasons trade barriers are implemented: Protect select industries, interests, & culture of country Prevent rich countries from being too influential

12 Commercial Policies When conducting business in another country you have to know the rules and regulations you will encounter Know American policies plus countries you choose to do business with Commercial policies - regulations & restrictions countries use to control international trade. Tariffs Quotas Embargo’s Non-tariff barries

13 Types of Commercial Policies Tariff Also known as a customs duty Tax placed on imported/exported products One of most common tools to control trade. Used as a source of revenue Import Tariff Taxes on imported products Tariffs help ensure imported products are not sold for less than domestic products.

14 Examples of American Tariffs France refused to join the USA in its 2003 Iraq invasion Bush Administration proposed 300% import tax on cheese Stayed at 100% Same as oats, chocolates, cured ham, and other European edibles Roquefort cheese

15 Examples of American Tariffs Most sold in the USA are manufactured in America Why? 126.94% tariff tax on Chinese manufactured paperclips Paper Clips

16 Example of American Tariffs Tobacco 350% tariff Canned Tuna 35% tariff

17 Non-American Shoe Companies 48% tax New Balance is Boston-based Peanuts 131.8% on shelled 163.8% on unshelled

18 Brooms 32% Tires 35% on China

19 Examples of Tariffs Where is the most expensive place to buy an Apple product? The average Apple device is $1,348 in this country

20 German Cars in China A BMW 650i Sells for $91,000 in Germany In China, it sells for $_________ 326,000

21 Commercial Policies (con’t) Export tariff – taxes placed on goods leaving a country & often used as revenue Directly raise a products price Used by countries such as Argentina, Indonesia & Malaysia for certain agricultural products. US does not use export tariffs.

22 How an exporter can determine their product’s tariff in another country… http://www.youtub -hz9t6KTFQ Video clip from International Trade Administration’s Free Trade Administration (FTA) tariff tool for exporters

23 Commercial Policies (con’t) Import quotas – restrictions on the amount of a product that can be imported into country. Protects domestic products by limiting competition Downside of quotas is that limited competition can result in increased prices Example of Import Quota The United States & Sugar World Price of Sugar is $.05 - $.13/lb United States it is $.20 - $.24/lb

24 Quota Example #2 In 1981, Japan voluntarily restricted number of cars exported to the US. Purpose was to give US automakers time to retool for production of fuel-efficient cars, but they used profits for other ventures. Since there was not a limit on dollar value of exports, Japanese auto makers then exported larger, more profitable cars, & used profits to build car plants in US. List of products/countries with quotas with Customs Border Patrol

25 Items subject to Quotas

26 Commercial Policies (con’t) Embargo - ban of commerce & trade with another country or group for various reasons. USA presently has embargos against Cuba, Iran, Sudan and Syria 1973 oil embargo by Organization of Arab Petroleum Exporting Countries (OPEC) OPEC refused to sell crude oil to Europe & US Gas prices increased from 38.5¢ to more than 55¢ per gallon

27 Commercial Policies (con’t) Boycott - type of embargo used by participants that believe an organization has done something morally wrong Naturewatch has long-standing boycott against French multinational L’Oreal for continued use of animal testing for cosmetics Vegetarians International Voice for Animals (VIVA) has boycott against German-owned Adidas for using kangaroo skins in some types of football boots eticket=cOrT55txMvI%3d&tabid=123 Boycott activity…use the above link for file

28 Commercial Policies A Boycott is a type of embargo Usually occur when a county or company is viewed has doing something morally wrong

29 Examples of Boycotts: International Buy Nothing Day Black Friday boycott of over consumption in Western economies Canada & USA Other countries it happens on Saturday

30 Abercrombie & Fitch 24 girls boycotted store in 2005 for their degrading slogans on shirts I had a nightmare I was a brunette Who needs brains when you have these

31 2002 - 2011

32 Male Shirts

33 argoed_countries/index.html argoed_countries/index.html Embargo activity… Assign country, find the effect date and what the embargo addresses. Present to class

34 Commercial Policies (con’t) Non-tariff barriers – Barriers based on legislative rules & regulations related to product. Example Europe requires GM food products be labeled as “genetically modified”.

35 Commercial Policies Voluntary export restraints - limit the total amount of products exported China has voluntarily limited total amount of textiles exported to US. Japan has voluntarily limited total number of cars exported to US The United States has chosen to raise prices versus prepare for competition with these countries

36 Commercial Policies Dumping: Occurs when countries sell products for less than the cost of production Form of predatory pricing Attempt of Big Business to gain market share Detrimental to small business China is most commonly accused of this practice Anti-Dumping laws exist to guard against Tariffs & quotas are implemented

37 Assignment Factors of production review of AK Be specific How is resource utilized Infant Industry in America Boycott Advertisement Assignment

38 Commercial Policies (con’t) Dumping - when countries export & sell their products for less than cost of production. Ex) Japan & Brazil were accused of dumping steel in US. Ex) China was accused of dumping steel fasteners in EU.

39 Commercial Policies (con’t) Predatory pricing - lowering of price to gain market share. Dumping is type of predatory pricing. Ex) Products include steel, textiles, televisions, computers, hardware and farm crops. Ex) China has been primary target for anti-dumping complaints. International Trade Commission (ITC) – current investigations of dumping cvd/investigations/active/index.htm#safeguard cvd/investigations/active/index.htm#safeguard

40 Export Support Systems Export support systems - developed by countries to encourage exporting Indirect support activities used by governments to support sale of exports. Special trade fairs & trade events. The US Commercial Service as part of US Department of Commerce, sponsors events for US businesses. Consulates are government appointed officials from one country that reside in another country to represent interests of appointing country’s citizens.

41 Export Support Systems (Con’t) Export subsidies - payments made by governments to support export of products Direct export subsidies lower price of exported product & can include payments made directly to exporter by government. Low interest loans may be offered by government Used by US government and European governments for exported farm products

42 Export Support Systems (Con’t) Indirect export subsidies - support exporting in roundabout way. Boeing & Airbus receive help from their governments in research & development of their planes. This lowers internal costs to companies helping to keep prices lower for their planes & to compete globally 007/10/airbus_subsidie.html 007/10/airbus_subsidie.html

43 IMH 2.02 Activity You Tube videos on Airbus & Boeing Research both companies and the subsidies issue & provide their viewpoint on this type of indirect export subsidies. Utilize PPT format Brief History of Boeing and Airbus Description of product lines of both Locations of operations of both Summary of dispute over indirect export subsidies Student viewpoint on dispute including for or against these subsidies – Argue your case

44 Export Support Systems (con’t) Home page of US Commercial Service, part of Dept. of Commerce po&feature=relmfu US Commercial Service – federal export support video

45 In Conclusion: obBwvcUU 5 minute clip on Customs Border Protection trade overview

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