Chapter 2 Flashcards
Tarrif and Non- tariff barriers
- Until recently, use has been reduced in recent years
- Election of nationalistic leaders threatens this effort
- Some coutries attempt so does tendecy towards prtectionism
How does Global trade benefit all?
- Provides more business opportunitis for marketers
- provides wider selection of goods and services for consumers
The twentieth to the twenty first century (main events for economy)
- WWI lead to economic depression
- trade was halted due to high tariff walls
- United States set to spread capitalism after WWII
- Reducion of tarriffs and trade barriers
- GATT
What does GATT (Bby squirt prr) stand for
General agreement on Tariffs and trade
World Trade and U.S Multinationals
- usa rapidly expanded to foreign economies
many opportunities after WWII
U.S dominance deemed as threatening by late 1960s
- eu ad latin america put limits on usa
Economic power was more evenly distributed
World Trade and U.S Multinationals (Balange of merhandise)
Role of US in global trade evolved through time
- favorable balance until 1979 since then a constant trade deficit is the new norm
World Trade and U.S Multinationals. Which important questions raised in 1980s?
- how to compete in foreign markets
- fairness of international trade policies.
World Trade and U.S Multinationals. Many changes to world trade by 1990.
creation of organizations to facilitate trade
NAFTA, EU, AFTA, APEC
Power expected to shift to more countries.
Beyond the first decade of the twenty- first century
- Growth has slowed in most of the world except in China
- economies of developing countries will grow at a faster rate than developed countries
- economic power and influence will move away from industrialized countries
- competition will change as companies focus on gaining entry into or maintaining their position in emerging markets, regional tarde areas and established markets.
Balance of Payments
international trade
financial transaction occur with each trade
money is constantly flowing in and out of country
important to keep track of transactions
Protectionism
Nations utilize legal barriers, exchange
barriers, and psychological barriers to restrain the entry of unwanted goods.
balance of payments
the system of accounts that records a nation´s international financial transactions is called its balance of payment.
- records all financial transactions between its residents and thode of the res of the world during a given period of time- usually a year.
Current account
a record of all merchandise exports, imporrts and services plus unilateral transfers of funds
capital account
a record of direct investments, portifolio investment and short term capital movements to and from countries
reserves account
a record of exports and imports of gold, increases and decreases in foreign exchange and increases or decreases in liabilities to foreign central banks.
a balance of payments statement include what accounts
- the current account
- capital account
- reserves accounts
nontariff barriers
including quotas, boycotts, monetary barriers, and market barriers
tariff
simply defined, is a tax imposed by a government on goods entering at
its borders. Tariffs may be used as revenue-generating taxes or to discourage the importation of goods, or for both reasons. Tariff rates are based on value or quantity or a combination of both.
voluntary export restraints (VERs
Similar to quotas are the voluntary export restraints (VERs) or orderly market agreements (OMAs). Common in textiles, clothing, steel, agriculture, and automobiles, the VER is an agreement between the importing country and the exporting country for a restriction on the volume of exports.
Boycotts and Embargos
A government boycott is an absolute restriction against
the purchase and importation of certain goods and/or services from other countries.
Thisrestriction even can include travel bans, like the one once in place for Chinese tourists; the
Beijing government refused to designate Canada as an approved tourism destination.
Monetary Barriers
A government can effectively regulate its international trade position by various forms of exchange-control restrictions.
- Blocked currency
- Government approval
Blocked currency
is used as a political weapon or as a response to difficult balance-ofpayments
situations. In effect, blockage cuts off all importing or all importing above a certain
level. Blockage is accomplished by refusing to allow an importer to exchange its national
currency for the sellers’ currency.
government approved monetary barriers
to secure foreign exchange often is used by countries experiencing
severe shortages of foreign exchange. At one time or another, most Latin American andEast European countries have required all foreign exchange transactions to be approved by a
central minister.
standards in trade barriers
Nontariff barriers of this category include standards to protect health,
safety, and product quality. The standards sometimes are used in an unduly stringent or
discriminating way to restrict trade, but the sheer volume of regulations in this category
is a problem in itself.
antidumping penalties
Antidumping laws were designed to prevent
foreign producers from “predatory pricing,” a practice whereby a foreign producer intentionally sells its products in the United States for less than the cost of production to undermine the competition and take control of the market. This barrier was intended as a kind of antitrust law for international trade.
Domestic Subsidies and economic stimuli
Agricultural subsidies in the United
States and Europe have long been the subject of trade complaints in developing countries.
However, the economic doldrums beginning in 2008 triggered new, huge, domestic bailout
packages in the larger economies for banks and automakers, to name just a couple
Omnibus Trade and Competitiveness Act of 1988
is many faceted, focusing on assisting
businesses to be more competitive in world markets as well as on correcting perceived
injustice in trade practices. The trade act was designed to deal with trade deficits,
protectionism, and the overall fairness of our trading partners.
World Trade Organization (WTO)
which encompasses
the current GATT structure and extends it to new areas not adequately covered in
the past. The WTO is an institution, not an agreement as was GATT. It sets many rules
governing trade among its 164 members, provides a panel of experts to hear and rule on trade disputes among members, and, unlike GATT, issues binding decisions
