1 International Trade Trade Between Nations Trade Between Nations Why Why Division of Labor Division of Labor Cost – Absolute (Absolute Advantage) Cost – Absolute (Absolute Advantage) Cost – Relative (Comparative Advantage) Cost – Relative (Comparative Advantage) Why is Trade Good between Nation? Why is Trade Good between Nation? Consumers – distribution – which consumers Consumers – distribution – which consumers Producers – efficient allocation of resources Producers – efficient allocation of resources

2 International Trade Organization of Trade Organization of Trade Before 1940 Before 1940 Smoot Hawley Smoot Hawley After 1940 After 1940 GATT & WTO GATT & WTO Tariffs Tariffs Quotas Quotas Non-tariff restrictions Non-tariff restrictions

3 International Trade Trade Between Nations Trade Between Nations Why Why Division of Labor Division of Labor Cost – Absolute (Absolute Advantage) Cost – Absolute (Absolute Advantage) Cost – Relative (Comparative Advantage) Cost – Relative (Comparative Advantage) Why is Trade Good between Nation? Why is Trade Good between Nation? Consumers – distribution – which consumers Consumers – distribution – which consumers Producers – efficient allocation of resources Producers – efficient allocation of resources

4 International Trade Organization of Trade Organization of Trade Before 1940 Before 1940 Smoot Hawley Smoot Hawley After 1940 After 1940 GATT & WTO GATT & WTO Tariffs Tariffs Quotas Quotas Non-tariff restrictions Non-tariff restrictions Changing Nature of Trade Changing Nature of Trade From International to Multinational From International to Multinational Global– trading groups and regions Global– trading groups and regions EU EU NAFTA NAFTA African Union African Union Pacific Rim Pacific Rim

5 Global Reach International Trade International Trade Imports Imports Exports Exports Trade Balance (I – E = TB) Trade Balance (I – E = TB) Currencies Currencies Exchange Rates Exchange Rates Trade Rules Trade Rules GATT GATT WTO WTO

6 International Trade Trade Zones Trade Zones NAFTA NAFTA EU EU Tariffs Tariffs Quotas Quotas Organizations Organizations World Bank World Bank International Monetary Fund International Monetary Fund

7 International Trade Trade Zones Trade Zones NAFTA NAFTA EU EU Tariffs Tariffs Quotas Quotas Organizations Organizations World Bank World Bank International Monetary Fund International Monetary Fund

8 International Trade Group of 8 – G8 Group of 8 – G8 US US Japan Japan Germany Germany France France UK UK Italy Italy Canada Canada Russia Russia