- The Role of Trade Balances
- Balance of Trade – Difference between how much a country imports and exports
- Trade Surplus (More exports than imports)
- Trade Deficit (More imports than exports)
- Increasing Exports
- Decreasing Imports
- Tariffs – Tax imposed on imported goods
- Quotas – Limits # of items that can be sold in a country
- Embargoes – Complete ban on imports or exports from a particular country
- Boycotts – Do not buy goods from certain countries
- Protectionism
- System of imposing extra costs on imports to protect the interest of local businesses
International Trade Relationships - International Trade Agreements
- Economic Integration
- The practice of removing trade barriers and establishing cooperation to connect businesses and business people across national borders
- Globalization
- Having operations in a variety of nations
- Investments are easier to make in new areas
- Can share technological innovations
- Everyone has access to more and better goods and services
International Trade Relationships - Trade Alliances
- General Agreement on Tariffs and Trades (GATT)
- World Trade Organization (WTO)
- Most Favored Nations Status – Any favor or privilege given to one member must be granted to all members
- National Treatment – Principle that once a product has cleared customs at a member nations border, that nation will treat it as a domestic good
- Escape Clause – Allows a developing country to charge higher tariffs to develop new and growing companies
- Dumping Policies – Protects against dumping
- Dumping – the practice of selling goods in another country for less than the cost of manufacturing them or less than market price.
International Trade Relationships - European Union (EU)
- More than 25 members, geographically close
- Many use the “euro” as currency
- Open trade with few tariffs or restrictions
- NAFTA – North American Free Trade Agreement
- Eliminates trade barriers between U.S., Canada and Mexico
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