International Trade

Almost all nations produce goods that other countries need. At the same time they also buy goods from other countries. Almost all nations produce goods that other countries need. At the same time they also buy goods from other countries.

Trade has been important throughout history. During the middle ages, many countries in Europe starting producing more goods than they could use. So they used these extra goods to trade for spices and silk from Asia. This was known as international trade.

What is International Trade? International trade occurs when nations buy and sell to each other.

EU members use a system of International Trade known as Free Trade. Free trade means that countries can sell their goods to other countries without fees or taxes (tariffs) that would make imports more expensive.

So, why don’t all countries use Free Trade? So, why don’t all countries use Free Trade? Well, sometimes countries don’t want to buy or sell goods to other countries. Well, sometimes countries don’t want to buy or sell goods to other countries. So they set up trade barriers. So they set up trade barriers.

Trade Barriers Governments use trade barriers to limit free trade between countries. Three of the most common examples of trade barriers are.... Embargoes... Quotas... Tariffs...

Embargoes One type of trade barrier is an embargo. This is when a government blocks exports or imports from another country. One type of trade barrier is an embargo. This is when a government blocks exports or imports from another country.

Sometimes governments place an embargo on goods because the products aren’t safe. Like the recent goods from China that were contaminated. were contaminated. Or the beef from the UK that was infected with mad cow disease. cow disease.

Sometimes governments put an embargo on products to punish other countries for their policies. For instance, the U.S. put an embargo on oil from Iran in the 1970’s when the government of Iran took several American citizens hostage.

The U.S. has had an embargo against all Cuban goods since the 1950’s when Cuba was overthrown by Fidel Castro and his communist government. Many Americans think the embargo hurts the U.S. since it forbids us from doing ANY trade with Cuba at all. There is a move to have the embargo lifted. The president recently extended the ban on all Cuban products for one more year.

Sometimes governments put an embargo on goods because they want consumers to buy goods made in their own country. Sometimes governments put an embargo on goods because they want consumers to buy goods made in their own country.

Quotas are another way governments restrict trade. Quotas don’t forbid a product from entering a country like an embargo does. Quotas just set a limit on how much can be imported. What are some reasons a country would have for setting quotas? Explain this cartoon to your partner.

For instance... The U.S. might want to limit the number of cars it imports from Japan. So they would put a limit, or quota, on the number of cars Japan could export to the U.S.

What do quotas accomplish? Well, the idea is to encourage home sales. If there are fewer Japanese cars, then consumers would have to buy more American cars.

Quotas are often used to protect and promote the home country’s industries.

Tariffs are another trade barrier. Tariffs are fees (like a tax) charged for goods or services brought into a country from another country. Tariffs usually are charged by a government when imported goods cross its border. Tariffs are fees (like a tax) charged for goods or services brought into a country from another country. Tariffs usually are charged by a government when imported goods cross its border.

Governments have used tariffs since ancient times. At first they were used to raise money. Now they are used more to control imports. Ex: Look at the price on your AR book. Do you see two prices? Why?

International trade is an important part of today’s economies. Nations that trade with one another often become closer and come to depend on the goods from other countries. After all, what would we do without bananas, coffee, vanilla and CHOCOLATE! ? International trade is an important part of today’s economies. Nations that trade with one another often become closer and come to depend on the goods from other countries. After all, what would we do without bananas, coffee, vanilla and CHOCOLATE! ?

Trade Barriers Used by governments to limit trade between countries Embargoes A block on imported goods Quotas Sets a limit to the number of imports or exports Tariffs A fee or tax on imports