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14 Cards in this Set
- Front
- Back
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International Trade
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The exchange of goods and services between countries.
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Why do countries trade?
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-Lower prices
-Greater Choice -Differences in Resources -Economies of Scale -Increased Competition |
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Free Trade
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takes place between countries where there are no barriers to trade put in place by governments or international organizations.
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Dumping
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the selling by a country of large quantities of a commodity at a price lower than its production cost in another country--ruins domestic producers.
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Arguments for Protectionism
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-protecting domestic employment
-protection the economy from low cost labor -protecting an infant industry -to prevent dumping -avoid risks of overspecialization -strategic reasons -to protect production standards -raise government revenue -correct a balance of payments deficit. |
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Arguments against protectionism
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-may raise prices to consumers and producers of imports that they buy.
-less choice -competition diminishes -- less incentive to lower prices -distorts comparative advantage. |
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Tariff
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A tax that is charged on imported goods.
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Subsidy
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an amount paid by the government to a firm, per unit of output.
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Quota
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physical limit on the numbers or value of goods that can be imported into a country.
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Health and Safety Standards
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may restrict import entry if it is lengthy to carry out proof that they are not violating these codes.
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WTO
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World Trade Organization: an international organization that sets the rules for global trading and resolves disputs between its member countries.
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Aims of WTO
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-administer WTO agreements
-be a forum for trade negotiations -handle trade disputes among member countries -monitor national trade policies -provide technical assistance and training for developing countries. -cooperate with other international organizations |
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Pro-WTO
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-promotes peace (diplomacy)
-disputes handled constructively -rules make life easier. -cuts cost of living for consumers -provides more choice of products -raises incomes and stimulates economic growth -encourages good govt |
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Anti-WTO
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-important decisions made between small groups of wealthier nations
-developing countries can't afford to go to all negotiations/have representatives -WTOs includes long list of services that should be privatized -Free trade does not lead the common man to be better off (rich get richer) -WTO treaties biased towards MNCs and rich countries (allowed higher import duties and quotas in certain products, highly protected agriculture in developed countries) |
