Trading Relations And Patterns 3.2.1.3 Flashcards
Terms of trade
the cost of goods that a country has to import, compared to the price at which they can sell the good they export.
Tata steel UK
In 2016, Tata Steel announced it intention to sell its UK business, risking the jobs of thousands of employees, there was a call for the British government to renationalise the steel industry.
• Government aimed to work with Tata to find a buyer, to protect steel jobs.
• Such an arm’s length intervention, which stopped short of direct conflict with the Chinese
Government, saved face for the UK’s ongoing negotiations to encourage Chinese
investment (including in a £18 million nuclear plant).
• In 2015, the EU had imposed anti-dumping duties for 6 months on selected steel imports
from China and Taiwan.
• Britain’s Brexit vote in 2016 raised questions amongst potential buyers of Tata Steel’s
UK operations about whether or not a UK outside the EU would have a freer hand to impose more protective import tariffs.
Trade bloc
Trade blocs are associations between different governments that promote and manage trade. Trade blocs remove trade barriers between their members while keeping common barriers to countries who aren’t part of the bloc.
Types of trade blocs
Regional trade blocs- easier for countries to trade with neighbours
Specific industry trade blocs- eg. Organisation of the Petroleum Exporting countries OPEC
Special economic zones
SEZs are areas that have different trade and investment rules to the rest of a country e.g. companies investing there may pay lower taxes on land and goods. SEZs increase trade while keeping barriers to the rest of the country.
What do special economic zones do ?
increase the volume of trade with emerging economies in less developed countries.
Two major trade groups
EU
NAFTA (North American free trade association)
Trade in developed countries
2013, imports and exports between US and EU accounted for over 30% of global products trade. Most of these products, e.g. machinery or chemicals, require a lot of money and expertise to make.
Less developed countries
mostly trade with developed countries – EU is largest trading partner of many countries in sub-Saharan Africa
Less developed countries
Most less developed countries trade mostly with emerging economies and developed countries. E.g. Bangladesh mainly exports to the US and EU and imports from China and India.
Emerging economies trade
Emerging economies like China and India are increasingly important to global trade.
China’s manufacturing sector has grown rapidly, and a highly educated population has grown India’s service sector.
USA trading relations
Part of large agreements eg. trans-pacific partnership (TTP), Transatlantic Trade and Investment partnership (TTIP)
Trans pacific partner ship
Free trade agreement being negotiated by 12 countries USA, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam
This region has seen the most rapid growth in trading
China trading relations
Member of G20 group, international forum for governments and central banks of major economies
The group of 77 and China aims to represent interests of worlds less developed countries
Latin America Mercosur
Mercosur
Comprised of Brazil, Argentina, Uruguay, Paraguay, Venezuela (Bolivia and Ecuador
have applied to join
Allows free movement of labour
EU and USA main markets
Latin America Pacific Alliance
Comprises Chile, Peru, Colombia, Mexico (Costa Rica, Panama, Guatemala have
applied to join)
Open to bilateral agreements with other nations
Asia pacific and USA are main markets
Why was the EU established?
It was founded in the years after WW2, the origins of the EU were based on a simple premise - that countries who trade with each other (become economically interdependent) are less likely to be in conflict.
Workings of the EU
The huge trade bloc (or single market) of the EU is now only one aspect of its work. Legally binding treaties, agreed by all member countries, govern life for all 500 million EU citizens. 175 million citizens have a single currency, the euro. EU policies cover every aspect of our lives, from human rights to the environment.
Greece and the EU
-Greece came close to leaving EU in 2015 due to debts of over 4 billion euros, 3 billion of European Central Bank
For Greece staying in EU
Greece imports nearly 50% of its food and 80% of its energy from abroad and consequently benefits from being part of the European free market.
Greece would find it very difficult to borrow further and would therefore have to pass on increased living costs to the population (everything would be more expensive).
Against Greece being in EU
An independent Greece might be able to trade more freely and to take advantage of its location and geography. Greece would be free of EU legislation and control, and might be able to newly position itself as a regional trading hub and gateway into the Middle East, Balkans or Russia.
