1. Today’s Schedule – 12/7 Trade Barriers and Agreements PPT
Free Trade Discussion/Debate
International Trade Project HW
Read 18.2

2. Trade Barriers
Preventing a foreign G or S from freely entering a nation’s territory

3. Import Quotas Limit on the amount of a G or S that can be imported
Often done to give U.S. businesses an advantage in the U.S. market
Ex: Cotton

4. Tariffs Tax on imported goods
Custom Duty- a tax on certain items purchased abroad

5. Effects of Trade Barriers
Limit supply
Limit specialization
Increased prices
Tariffs imposed on businesses are passed along to consumer
Trade wars
Retaliation against a country

6. Arguments in Support of Trade Barriers
Protect jobs
Preventing foreign competition
Protects infant industries
From more mature companies
Necessary for national security
In time of war, want to produce G in the U.S.
Protects foreign workers

7. Arguments For Free Trade
Forces specialization
Focus on industry nation is best at producing
Force workers to obtain skills necessary to produce that G or S
Provides jobs and increased wages to workers in other countries
Keeps prices low
Forces competition among domestic and foreign businesses

8. International Trade Agreements
Cooperation between at least two countries to reduce trade barriers and tariffs and to trade with one another
MFN Status
All countries with this status receive the same benefits as given to one

9. International Trade Agreements
World Trade Organization
Sponsor conferences to negotiate reduced trade barriers
Enforces trade rules/agreements
European Union
Collective of European countries who act like one market

10. International Trade Agreements
NAFTA
Free trade among Canada, U.S. and Mexico
All tariffs to be eliminated by 2009
Major protest over this
Move factories to Mexico along with jobs

11. International Trade Agreements
APEC- Pacific Rim Countries
MERCOSUR- South American Countries
CARICOM- Caribbean Countries