A way of obtaining scarce resources International Trade A way of obtaining scarce resources

Comparative Advantage The ability of a country to produce a good at a relatively lower cost than another country can Because of comparative advantage, nations specialize They use their scarce resources to produce those things they produce better than any other countries Examples: Saudi Arabia: Oil Columbia: Coffee

Trade Restrictions Protective Tariffs: a tax on an imported good to make the price of imported goods higher than the price of the same goods produced domestically Encourages people to buy American products

Trade Agreements European Union (EU) An organization of independent European nations No trade barriers among these nations Goods, services, and even workers can move freely among nations Use a common currency, the EURO

Trade Agreements continued NAFTA North American Free Trade Agreement Eliminates all barriers to trade among US, Canada, and Mexico

Trade Agreements continued World Trade Organization (WTO) Oversees trade among nations Organizes negotiations about trade rules Provides help to countries that are trying to develop their economies Settles trade disputes

Unfair Balances of Trade A balance of trade is the difference between the value of a nation’s exports and its imports If a nation imports more than it exports, it has a trade deficit A nation exports more when its currency is weak because its goods are cheaper A nation exports less when its currency is strong because its goods are more expensive

Effects of Trade Deficits Value of a nation’s currency is devalued on foreign exchange markets Supply of currency floods the market, causing a further devaluation of the currency Unemployment

Trade Sanctions and Embargos Trade sanctions are efforts to punish another nation by imposing trade barriers Embargos are an agreement among a group of nations that prohibits them from trading with a target nation

OPEC OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry. Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela