Trade Essential Questions: 1. What are characteristics of the three types of economic trade barriers? 2. How are they present in Europe? 3. Why does international trade requires a system for exchanging currencies between nations?

SS6E6 The student will analyze the benefits of and barriers to voluntary trade in Europe. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos. Explain why international trade requires a system for exchanging currencies between nations.

Trade Exchange. Trade is the voluntary exchange of goods and services among countries. France sells cheese to Russia; Russia sells lumber to France.

Imports Goods that come into a country. Russia puts the lumber on a freight ship and sends it to France. France imports Russian lumber. Imports come in.

Exports Goods that a country sends out. Russia puts the lumber on a freight ship and sends it to France. Russia exports the lumber. Exports exit out.

Specialization Some baseball players are especially good at throwing; they specialize in pitching. A country with good soil and weather will specialize in agriculture. A country with huge forests will specialize in lumber. Countries will export what they specialize in, and import what they struggle to produce.

Free Trade Any goods or services from any country can move freely to any other country when there is free trade. That’s good for consumers: choices increase; prices decrease.

Trade Barrier A limit to trade. A trade barrier is not a fence; it is a government policy to limit trade with another country. Trade barriers are laws created to solve problems. A trade barrier may be to protect our own farmers or workers from foreign competition, or to pressure or punish another country

What is a Tariff? A trade barrier that places a tax or fine on imports. The goal of a tariff is to make foreign goods more expensive, so consumers will buy goods produced in our own country. A tariff is good for our workers; consumers are mad.

Quotas A trade barrier that places a number limit on a specific imported good. The goal of a quota is to limit the number of foreign goods that can be brought into our country, so consumers will buy our goods. Workers want quotas.

Sanctions A sanction is a penalty or punishment. In trade, a sanction is a limit on one area of trade with a country to put pressure on that country. My country imposes sanctions on your country : we won’t sell you any trucks or planes until you stop… doing what we don’t like.

Embargos Stop trade. One country stops trading with another country. The goal of an embargo is to pressure or punish another country. We will slap an embargo on goods from your country until you… Soon you have a trade war.

Free Trade Zone A region that has no trade barriers among countries. The European Union is a free-trade zone. There are no trade barriers in the EU. The US, Canada, and Mexico have a free-trade zone called NAFTA, the North American Free Trade Agreement. Canada can’t slap a tariff on machines made in Mexico. Goods move freely.

Currency Exchange Currency is the money system of a country. The US uses dollars. Poland uses zlotys. Russia uses rubles. One US dollar equals 3.5 Polish zlotys. When the US sells goods to Poland, the zlotys Poland pays must be converted into dollars. Banks gladly charge a fee to do this. That makes currency exchange expensive.

3 Economic Trade Barriers The most common trade restrictions are: tariffs—taxes on imported goods 2. quotas—limits on the quantity of goods that are imported 3. embargoes-- a complete ban on trading between countries

Your Task: Exit Ticket Write a paragraph explaining reasons for a country to have trade barriers and exchange of currencies? fly write a paragraph elaining reasons for a country to have trade barriers and exchange currencies?