2.2 International trade Flashcards

1
Q

Why should most countries trade

A

Comparative advantage - producing what they are best at

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2
Q

Why does trade remain limited

A

Barriers to trade (mostly due to protectionism)

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3
Q

What is a barrier to trade

A

Government imposed restraints on trade

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4
Q

Give an example of some barriers to trade

A

Tariff
Import Quota
Import licence
Embargo (complete ban)
Scientific/Ethical reasons (Bio hazard to farming, or Nestle using child labour)

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5
Q

How has the volume of international trade changed

A

Since 1995 when the WTO took over, tariffs have shrunk to 1/10 of what they were, causing trader to increase

The financial crash in 2008 reduced trade

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6
Q

How is the pattern of international trade changing and why

A

G7 countries still dominate 50% of world trade

Growth in NEES like China and Africa
Growth in purchase of fair trade
Growth of ethical investments

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7
Q

What was the 2013 world merchandise trade value and what will it be in 2020

A

$19 trillion

$35 trillion (almost double)

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8
Q

What is FDI

A

Foreign direct investment , a VERY IMPORTANT source for funding NEES

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9
Q

What are the trends of FDI

A

$1 trillion FDI flows around the globe each year with top investors USA, China and Belgium

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10
Q

Why do people invest in FDI

A
  1. Plentiful resources (Mittal Steel, Luxembourg in over 60 countries)
  2. Access to consumer markets
  3. Financial services
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11
Q

What is fair trade and examples of some products

A

Social movement with aims of achieving fair trade, sustainable for NEE’s

Bananas, Cocoa and Cotton

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12
Q

Why was the fair trade movement started and what do they advocate for

A

Producers had little influence on the price, but extremely relied on it

  1. Higher income
  2. Better working standards
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13
Q

What are the 2 scales of fair trade

A

International - organsise into cooporatives and combine produce

Small scale - buy directly from retailers

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14
Q

Give an example of a small scale fair trade company

A

Cafe Direct work directly with over 280,000 small farms

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15
Q

What is an ethical investment

A

Choosing to invest in socially responsible choices based on personal beliefs

(social and environmental)

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16
Q

Give an example of an ethical investor

A

Monsoon - in 2013 their Chinese farms were said to kill Angora rabbits when plucking their fur, so they puled out of the producing company

17
Q

Give an example of international fair trade

A

Banana trade wars

18
Q

Why is it important to study the banana trade wars

A

They are the 5th most traded agricultural product due to high volume, energy and potassium

It raised numerous social, environmental, economic and political concerns

19
Q

What are some environmental issues outlined by banana trade

A
  1. Largest agrochemical input into environment
  2. Deforestation (soil+water damage)
  3. 1 tonne of bananas = 2 tonnes of waste
20
Q

What are some social, economic and political issues outlined by banana trade

A
  1. TNC’s and retailers control the markets and set the prices
  2. WTO ruled against development (the lome convention)
  3. Producers have no control and only 10% is paid back to them
  4. 20 year trade war with EU and US
21
Q

Who currently dominate world banana trade

A

ACP - African , Caribbean pacific
Dollar producers (USA owned)

22
Q

Who import and export the most bananas

A

US and EU import over 50% total

Latin America and Caribbean produce 80% total (Ecuador the most)

23
Q

How has global banana trade changed

A

80% of it was controlled by 5 large, vertically integrated TNC’s like Chiquita owning the transport, plantations etc

Now they only control 45% of the trade due to the growth of ACP and by freeing themselves of plantations to only distribute

24
Q

What is a race to the bottom

A

Suppliers moving to the cheapest plantations possible

25
Q

How long was the banana trade dispute

A

20 years (1992 till 2012)

26
Q

Why did the banana trade wars occur

A

EU countries made the “Lome convention agreement” to stop tariffs with 70 ACP to help their small scale farms compete with Dollar producers

In 1992, The large TNC’s like Chiquita complained as they lost revenue

The WTO ruled against the EU for being protectionist

Both EU and US were unhappy, so they put large sanctions on each others imports and wasn’t resolved until the EU eventually agreed to slowly buy more dollar producer bananas