Trade Barriers Reading Opening Activity/Discussion Questions Vocabulary Closing Activity – Scenario Classification

W HY DO COUNTRIES TRADE ? Countries depend on other nations for good and services they can’t produce or don’t have within their own borders. Some countries trade with other nations for particular goods and services because they either lack the technology to produce the goods themselves or the other countries can do it cheaper. Some nations trade as a way to have good relationships with other countries. A good trade treaty symbolizes a good relationship among countries. Trade, or lack thereof, also can be used as a weapon to do harm to competing or belligerent countries. Powerful nations throughout history have used economic sanctions--essentially blocking and prohibiting trade--with other nations in order to punish or force political or behavioral change.

T RADE B ARRIERS – O PENING DISCUSSION Activity 1: Examine the clothing you are wearing and other items you own; determine where these items were produced. (Most items have a "Made in _______" tag or label.) Generate a list and answer the following questions: 1. How do you benefit from being able to buy goods made in other countries? 2. What country made money when you bought that shirt? 3. Would you favor a policy that would raise the price on T- shirts and reduce the amount available? What if it meant more American jobs were created? Chances are some of the items on your list are imported from other countries. Everyone is affected by international trade.

T ARIFFS / QUOTAS /E MBARGOS / FREE TRADE Nations restrict trade through tariffs, quotas, and embargos Tariffs are taxes placed on imported goods one nation trades with another Quotas are limits put on the number (or quantity) of items allowed into a country. Embargos are government orders forbidding (or banning) trade with another country. Free trade is trade with no taxes or tariffs (not every nation does this) [ex. NAFTA: United States, Canada, and Mexico].

T RADE B ARRIERS - CLOSING ACTIVITIES Activity 2: For cases 1-4, decide which kind of barrier is being imposed (put into place). 1. Canada frequently ships maple syrup to the USA and does not worry about taxes or tariffs. 2. Korea may export only 15,000 automobiles a year to the USA. 3. The USA bans all trade with Cuba until the communist government makes significant personal rights improvements for its people or the communist form of government is replaced. 4. A tax of 15% makes jewelry from Mexico more expensive than jewelry made in the USA.