International Trade

Trade demonstration: Throw the ball to the state that you are exporting to. Ball=goods Throw=exports Catch=imports

How did the demo illustrate comparative advantage? Comparative advantage: A state with the resources to produce a good or service more efficiently than others. Ex: Saudi Arabia, exports petroleum because it is available. “Trade can benefit everyone involved, but everyone will not necessarily benefit the same.” Most trade policies are focused around dealing with the unequal effects that come with the relationships states build based on their comparative advantages.

What is Protectionism? Protectionism: An economic strategy to limit trade in which governments create barriers to slow down or restrict trade. Ex: tariffs, duties, subsidies, quotas. Why would a state do this? To PROTECT its own industries. How does this work?

What is Free Trade? Free Trade: trade that is conducted without barriers. A major component to Globalization. Generally, free trade is considered good, however, most states still have various elements of protectionism as part of their foreign policy.

Read pages 4-10 of International Trade part I: Complete study guide through question #8. Create a chart like the one below, with 3 bullets/side… POSITIVE EFFECTS OF GLOBALIZATIONNEGATIVE EFFECTS OF GLOBALIZATION

A New Era of Global Trade (pgs 4-7) 2 major developments caused dramatic shifts in trade 1- The Great Depression, Smoot-Hawley Tariff Act (1930s) Economic struggles led to states enacting more protectionist policies, like high tariffs 2- WWII, Bretton Woods Conference, (1944) USA became, “the arsenal of democracy” in WWII, supplied most allied countries. After the war, The USA & 43 other nations met to encourage more trade, known as the Bretton Woods Conference. The IMF, World Bank, and GATT were Bretton Woods *With U.S. leadership, the world has undergone less Protectionism and more Free Trade in the decades since the end of WWII.

A New Era of Global Trade, continued (pgs 4-7) Less protectionism has helped to liberalize economies and allowed for gigantic growth in Asia in particular. China is the largest example, as are E. Asia’s, “4 Tigers”… Singapore Taiwan Hong Kong South Korea Key to understanding trade policy… Free Trade usually = liberal Protectionism usually = conservative

The Pressures of Globalization (pgs 7- 10) POSITIVE EFFECTS OF GLOBALIZATION: NEGATIVE EFFECTS OF GLOBALIZATION: Has created economic interdependence. Has developed new job opportunities. Has improved the economies of many states. (Brazil, India, China) Has made jobs less secure. Has “forced” American ways/culture on the world (see quote on page 9). Has helped wealthy states/economies more than weaker/poor ones. Globalization: economic, political, cultural, and social transformations occuring throughout the world.

Trade Agreements (pgs 10-12) Identify the significance of the following trade agreements: NAFTA European Union WTO APEC

Trade agreements and organizations NAFTA: North Atlantic Free Trade Agreement; free trade between USA, Mexico, and Canada. European Union: an organization that has a single currency (the Euro), and a single a market for most European states. WTO: World Trade Organization; aims to liberalize trade, settle disputes on trade, and prevent trade problems such as “dumping”. Over 150 states have signed. APEC: Asian-Pacific Economic Cooperation: A potential trade bloc, like NAFTA or the EU that includes trading partners througout the pacific rim.

Trade Agreements and organizations continued G-20: 20 wealthiest economies in the world; periodically meet to discuss trade or environmental policies at summits. Who do you think is in the G-20?