ASIA ECONOMIC UNDERSTANDINGS Specialization, Trade, Trade Barriers, & Exchange Rates Standard SS7E9

ASIA economic UNDERSTANDINGS Standard SS7E9: The student will explain how voluntary trade benefits buyers and sellers in Southern and Eastern Asia. a. Explain how specialization encourages trade between countries. b. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. c. Explain why international trade requires a system for exchanging currencies between nations.

FIRST FIVE Agenda Message: After-School Tutoring is Tomorrow 4-5p. CDA-IV Study Guides go home tomorrow. CDA-IV Flash Cards are due Monday. Standard: Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. Essential Question for Tuesday Feb. 24th: Why does economic specialization make trade between countries easier? Warm-up: Command economies are most often associated with which type of government? Today We Will: Start Economic Specialization, Trade, & Trade Barriers

answers E.Q. Answer for Tuesday Feb. 24th: Countries specialize in what they produce best and most efficiently. They then buy (or trade) for goods and products from other countries that they need. Warm-up Answer: Communist governments

FIRST FIVE Agenda Message: Social Studies Progress Reports go home Monday, March 2nd. CDA IV Study Guides go home TODAY! Study Guide Flash Cards are due Monday. BYOT Monday-Thursday of next week. Standard: Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargoes. Essential Question for Friday February 27th: Briefly describe the three types of Trade Barriers. Warm-up: Why is specialization important in trade between countries? Today We Will: Complete Economic Trade Start Trade Barriers

answers E.Q. Answer for Friday February 27th: Tariff – means a tax on imported goods or products, usually making them more expensive. Quota – means setting a limit on the number of goods or products that can be imported into a country, usually making these products more expensive. Embargo – Stops trade between countries altogether. Warm-Up: Countries specialize in what they produce best and most efficiently. They then buy (or trade) for goods and products from other countries that they need.

ASIA economic UNDERSTANDINGS Specialization Helps Everyone Specialization is where countries produce those things that they make best and trade with others for the things they need. Every country has different natural resources, human capital, capital, and entrepreneurial resources.

ASIA economic UNDERSTANDINGS Countries specialize in what they do best. Specialization is an efficient way to work, and the cost of items produced is much lower as a result of specialization. One example of specialization is trade between Australia and Japan. Japan has few natural resources, however, it has developed industries like automobile manufacturing.

ASIA economic UNDERSTANDINGS Japan buys many of the raw materials from Australia, a country rich in natural resources. Japan “specializes in” auto manufacturing. Australia “specializes in” exporting raw materials. In the end, Australia imports lots of cars from Japan!

ASIA economic UNDERSTANDINGS Barriers to Trade Countries sometime set up trade barriers to restrict trade. Why? The reason is that they want to produce their own goods and sell them in their own country. These trade barriers include tariffs, quotas, and trade embargoes.

ASIA economic UNDERSTANDINGS Tariff A tariff is a “tax” placed on imported goods. Tariffs cause the consumer to pay a higher price for an imported item, increasing the demand for a lower-priced item produced domestically.

ASIA economic UNDERSTANDINGS Quota A quota is a “limit, on the amount of goods or products that can be imported into a country”. Quotas will often cause shortages that ultimately force prices to rise.

ASIA economic UNDERSTANDINGS Trade Embargoes Trade embargoes “forbid or stops trade completely” with another country.

ASIA economic UNDERSTANDINGS Examples of Trade Barriers In the 1980’s, quotas were set restricting how many Japanese cars could be imported into the U.S. to protect the U.S. car manufacturing industry. India imposes tariffs on agricultural products in order to protect its own farming industry.

ASIA economic UNDERSTANDINGS Examples of Trade Barriers cont. Beginning in 2001, the U.S. imposed tariffs on steel imported from China, India, and several other nations to protect the U.S. steel industry. In 2005, the U.S. imposed temporary quotas on certain types of cotton clothing from China in order to protect U.S. clothing manufacturers.

ASIA economic UNDERSTANDINGS Examples of Trade Barriers cont. After the Vietnam War, the United States imposed a trade embargo against Vietnam to pressure the Vietnamese government to provide information on Americans missing in action (MIA’s) during the war.

Practice test question In order to protect a nation’s car manufacturing industry from foreign car producers, the government charges the importer a tax for each imported car. This trade barrier is designed to make the imported car more expensive and encourage people to buy a locally made car. This is an example of what type of trade barrier? Subsidy Tariff Quota Embargo

Practice test question China’s government was concerned about recent military actions from North Korea. They decided to halt all food exports going to North Korea. This halt to trade is an example of what type of trade barrier? Tariff Boycott Quota Embargo