Cp4 Flashcards
All economies are depended of each other in merchandise trade process by which worlds various national economies and trading are fast becoming an interdependent(two or more people or things dependent on each other) system!
Globalization
80% of goods from Asia comes to
LA
Goods we buy from other countries
Imports
Goods we sell to other countries
Exports
A country that exports more then/exceeds imports
Trade surplus
A country that imports exceeds/more then exports
Trade deficit
Equal balance of importing and exporting
Total economic value of all the products that it exports minus the economic value of all the products that it imports
Balance of Trade
Federal Government Tax that are taxes on imported products
Tariffs
Why do we have Tariffs,Quotas and Embargo’s?
To protect domestic firms creating a balance of how many goods should be sold and made in the country
A Limit a maximum number of something/a certain product that can be imported
Quota
Banned goods that are NOT allowed in this country
Embargo
What are the Barriers to Trade?
Tariffs
Quota
Embargo
The practice of protecting domestic (ford,apple) business at the expense of free market competition
Critics may argue that this practice reduces competition
Protectionism
Is America Free-Trade?
No, because we are our own free trade in country but not globally
Economy is agriculture but the problems are no infrastructure(meaning no buildings roads trains or power supplies) and no exports
LDC Less Developed Countries
Example of Less Developed Country
Nicaragua
Has developing infrastructure
Has Export
Is changing from Agriculture to manufacturing
Developing countries
Examples of developing countries
Mexico and Zimbabwe
Becoming Services Instead of Manufacturing
Developed Countries
Example is American
Tried to eliminate Barriers to Trade
Agreement between three countries to eliminate the Barriers to Trade
NAFTA North American Free Trade Agreement
Canada
Mexico
United States
Is the….
North American Free Trade Agreement
Has pulp and wood
Canada
Has corn
United States
Has manufacturing and minimum wage of 65 cents
Mexico
Biggest reason why NAFTA was formed
We need Mexican Manufacturing
What is EU?
European Union
What is NAFTA?
North American Free Trade Agreement
Effects of making NAFTA
Increased direct foreign investment
increased exports and imports and created more jobs in Mexico
Effects of making EU
Eliminated quotas
removes trade barriers
Set uniform tariff levels on products imported within their groups
Created one currency
Most European nations
(EU) European Union
Problem with creating on currency (euro)
It brings down entire European Union
Trade agreement between 22 countries by eliminating trade barriers and put one step further by creating one currency
European Union
16 countries agreed to eliminate Trade Barriers
(ASEAN) Association of Southeast Asia Nations
What is ASEAN?
Association of Southeast Asia Nations
Has the greatest impact over Asian countries
ASEAN
What is GATT?
General Agreement on Tariffs and Trade
It’s purpose was reduce or eliminate trade barriers, such as tariffs and quotas
Signed after World War II
GATT (General Agreement on Tariffs and Trade)
What is PMN?
154 Preferred Number Nations
You buy coconuts and will buy your electronics to eliminate trade Barriers is exp of?
Preferred Number Nations
Agreement to countries to eliminate trade Barriers
Trade Barriers Trade Agreement
The Trade Police!
WTO- World Trade Organization
Began on January 1, 1995
WTO
Three goals of WTO
Reduce Trade Barriers
Created to encourage international trade
Promote Trade by encouraging members to adopt fair trade practices
The flow of money into or out of a country
The money that a country pays for imports and receives for exports
Balance of Payments
Why does money come in country
Because of imports
Why does money come out country
Because of exports
The rate at which the currency of one nation can exchange for that of another
Exchange Rate
Example of exchange rate
1 dollar of USA Money is only 97 cents in Japan
Fluctuations in the exchange rate influence the
Balance of Trade
Is a weak dollar good or bad for our balance of trade? And why?
Good! Because when our dollar is more Canadian buy less when our dollar is weak Canadian buy more
As one dollar becomes weaker the balance of trade is
Stronger
As the value of a country’s currency falls its balance of trade
Improves
When a economy’s currency is strong
Domestic companies
Domestic companies find it harder to export products
Domestic companies may move production to cheaper production sites in foreign countries
As the value of a country’s currency rises
Domestic companies
Domestic companies will have a hard time selling products in foreign markets
As the value of a country currency rises
Foreign companies
Will find it easier to sell their products in local markets
When Economies currency is weak
Domestic companies
Find it easier to export
Foreign demand for a company’s product may be greater then the same as or weaker then domestic demand
Gouging International Demand
Must decide whether and how to adapt its products to meet the special demands of foreign customers-also need to understand culture!
Adapt to Customer needs
Example of Adapting to customers needs
McDonald’s Sales lunch with Wine Italy!
Understanding culture and within that culture offensive signals
Adapting to customer needs
Paying suppliers and distributions to perform certain business processes or to provide needed materials or services
Moving your Business/jobs overseas!
Outsourcing
Canada United States and Mexico
NAFTA
A surplus or a positive trade balance is when
A country’s exports exceed/more then it’s imports
Imports of Canadian timber are limited to 14.7 billion per year (this example of what?)
Quota
The United States government forbids cigars in the country (this example of)
Embargo
A main purpose of tariffs on imports is to
Maintain domestic competitiveness
Production-getting goods Produced over sea
Offshoring
Geographic Clusters
North America
Europe
