International Trade BTEC Business

Trade Barriers the EU’s internal market is about removing barriers to free movement of goods, services, people and capital the flow of goods and services in the world economy is also important organisations have been set up to encourage the removal of barriers to free global trade

Why the stress on free world trade? The world economy went into a deep depression in the 1930s, as many countries closed their barriers to trade with other states. This led to: Mass unemployment Social upheaval Rise of fascism and the Second World War

How to prevent chaos happening again? Global powers set up bodies to support international trade International Monetary Fund World Bank All countries encouraged to join these organisations, or face exclusion from benefits of free world trade

What do the IMF and World Bank do? Lends to countries with balance of payments problems Pushes for economic reforms Reports on policies in member states

What do the IMF and World Bank do? Aims to help development by advising and lending – with many conditions Countries encouraged to lift import and export barriers, cut subsidies and remove price controls

Criticisms of IMF IMF only lends money if countries agree to: Sell their resources cheaply Cut public spending Critics say this serves to increase the problems of poverty in poor member countries

Criticisms of World Bank Loans depend on countries agreeing a ‘Structural Adjustment Programme’ Leads to rapid increase in price of goods in country Increases poverty Lower investment and cut social spending Little evidence that these policies work

What about the World Trade Organisation (WTO)? The WTO deals with the rules of trade between countries It developed from the General Agreement on Tariffs and Trade (GATT) WTO agreements set the ground rules for international commerce

Why so much outrage over globalisation? Other than the criticisms raised earlier, opponents of globalisation point to: Falling share of world trade taken by developing countries Subsidies and tariffs set by rich developed economies: USA steel tariffs, EU agricultural subsidies are two of the culprits