INTERNATIONAL TRADE + * EU* RB, p MK, U 27

Trade DEFINE “TRADE” USING THESE: activity / buying / selling / exchange / goods / services / within / between countries

Trade The activity of buying, selling or exchanging goods and services within a country or between countries. (commerce) Source: Longman Business English Dictionary

Visible = exchange of goods Trade

Visible InvisibleTrade = exchange of services

Visible InvisibleTrade Counter- (Barter) = direct exchange, without the use of money

From the countryTo the countryVisible InvisibleTradeTradeInvisible Counter-Counter (Barter)

From the countryTo the country B A L A N C EVisibleTrade Counter-EXPORTSIMPORTSCounter Balance of trade (Barter)

B A L A N C EVisible InvisibleTradeTradeInvisible Counter-EXPORTSIMPORTSCounter Trade in goods + Invisible trade (services) = Balance of payments (Barter) OUTGOINGINCOMING → RB 2, p 51

Visible TradeInvisible IMPORTS Counter (Barter) Visible InvisibleTrade Counter-EXPORTS Trade surplus (Barter) B A L A N C E Balance of trade Balance of payments → RB, p 45, task I

Visible TradeInvisible EXPORTS Counter (Barter) Visible InvisibleTrade Counter-IMPORTS Trade deficit (Barter) B A L A N C E Balance of trade Balance of payments → RB, p 45, task I

International Trade RB Free Trade and Protectionism

READING PROTECTIONISM AND FREE TRADE Read paragraphs 1 & 2 to explain: THE COMPARATIVE COST PRINCIPLE ABSOLUTE / COMPARATIVE ADVANTAGE (REASONS & EXAMPLES)

COMPARATIVE ADVANTAGE The idea that countries should s________ in making the products that they are particularly good at making, and should i______ products that other countries are better at making. Longman Business English Dictionary Comparative advantage the advantage that one country has over another because it is better at making a particular product. Longman Business English Dictionary Absolute advantage is the ability of a country to produce a particular good at a lower absolute cost than any other country. pecialize mport

Absolute or comparative advantage? Brazil-coffee China-shoes USA-computers Canada-timber South Korea –hi-fi Absolute Comparative(low labour costs) Comparative (technologically advanced) Absolute Comparative (educated labour force, low labour costs)

Collocations from pgs 1 & 2 rai______ living standard spe______ in the production c________ advantage ___ producing... fac______ of production div_______ of labour ec_______ of scale

Collocations from pgs 1 & 2 raise living standard specialize in the production comparative advantage in producing... factors of production division of labour economies of scale

Free trade vs. Protectionism International trade (imports and exports) without government r__________ Trade of goods and services without trade b_______ Protection of d________ industries against foreign c________ Government restrictions are placed on the i______ of foreign competitors (tarrifs, quotas and subsidies) estrictions arriers omestic ompetition mports

HW: PARAGRAPHS 3-5 & TASKS IN THIS PPT Read paragraphs 3, 4 & 5 to explain: PROTECTIONISM AND REASONS FOR PROTECTIONISM TYPES OF TRADE BARRIERS

Reasons forvs. Reasons for TRADE LIBERALIZATION PROTECTIONISM spe_______n a______e/c________e advantage a_____s to markets intern. c________n & efficiency efficient market m_________m freer m________t of resources f______m to choose protect jobs (v____s) protect d_______c ind. strategic reasons –i_____t industries political p______e protect culture (?) r______e prevent d________g PRACTICE TALKING ABOUT RESONS FOR BOTH

TRADE BARRIERS Tariffs Import quotas Embargo Subsidies Non-tariff barriers: Import substitution Safety norms Customs difficulties and delays

Name the trade barrier 1.Taxes on imported goods. They raise the price to customers and make them less attractive. 2.Limits on the quantity of a product that can be imported into a country e.g. 200,000 cars. 3.Laws and safety guidelines. 4.Making it difficult to arrange all certificates necessary to import into a country. 5.When a country produces and protects goods that cost more than those made abroad. 6.Money paid by a government to producers of certain goods to help them provide low-priced goods without loss to themselves. 7.A government order to stop trade with another country.

Barriers to free trade: tariffs, quotas, subsidies, customs duty, import licence, complicated regulations for documents WORD PARTNERSHIPS WITH: TARIFFS to impose / set a tariff to place a tariff on sth to eliminate / lift a tariff high / low tariffs QUOTAS to impose / introduce / lift / set quotas to increase / raise / reduce a quota to comply with / exceed quotas

Barriers to free trade: tariffs, quotas, subsidies, customs duty, import licence, complicated regulations for documents WORD PARTNERSHIPS WITH: SUBSIDY government / state subsidies to get / qualify for / receive a subsidy to give / grant / pay / provide a subsidy CUSTOMS DUTY the customs duties on foreign cars

Collocations from paragraphs 3, 4 & 5 im________ tariffs & quotas / restrictions pro________ strategic / infant industries ab_________ sectors l____ to structural unemployment red________ a balance of payment deficit pr_________ against dumping des_______ or wea______ competitors ret________ against restrictions a_________ economies of scale s____ a limit to imports pro______ revenue for the government