1. International Trade
BTEC Business

2. Trade Barriers
the EU’s internal market is about removing barriers to free movement of goods, services, people and capital
the flow of goods and services in the world economy is also important
organisations have been set up to encourage the removal of barriers to free global trade

3. Why the stress on free world trade?
The world economy went into a deep depression in the 1930s, as many countries closed their barriers to trade with other states. This led to:
Mass unemployment
Social upheaval
Rise of fascism and the Second World War

4. How to prevent chaos happening again?
Global powers set up bodies to support international trade
International Monetary Fund
World Bank
All countries encouraged to join these organisations, or face exclusion from benefits of free world trade

5. What do the IMF and World Bank do?
Lends to countries with balance of payments problems
Pushes for economic reforms
Reports on policies in member states

6. What do the IMF and World Bank do?
Aims to help development by advising and lending – with many conditions
Countries encouraged to lift import and export barriers, cut subsidies and remove price controls

7. Criticisms of IMF IMF only lends money if countries agree to:
Sell their resources cheaply
Cut public spending
Critics say this serves to increase the problems of poverty in poor member countries

8. Criticisms of World Bank
Loans depend on countries agreeing a ‘Structural Adjustment Programme’
Leads to rapid increase in price of goods in country
Increases poverty
Lower investment and cut social spending
Little evidence that these policies work

9. What about the World Trade Organisation (WTO)?
The WTO deals with the rules of trade between countries
It developed from the General Agreement on Tariffs and Trade (GATT)
WTO agreements set the ground rules for international commerce

10. Why so much outrage over globalisation?
Other than the criticisms raised earlier, opponents of globalisation point to:
Falling share of world trade taken by developing countries
Subsidies and tariffs set by rich developed economies: USA steel tariffs, EU agricultural subsidies are two of the culprits