INTERNATIONAL
TRADE
INTERNATIONAL TRADE
GLOBAL TRADE, WORLD TRADE,
FOREIGN TRADE, REGIONAL TRADE
vs.
HOME TRADE, LOCAL TRADE,
DOMESTIC TRADE, INWARD TRADE
EXPORTING AND IMPORTING
(NOUNS AND VERBS)
EXPORTER / IMPORTER
Last year, the United States EXPORTED cotton to
Italy, and IMPORTED olive oil from that country.
Croatia should increase its EXPORTS. The country's
IMPORTS are very high. (n.pl.)
Vegeta is AN EXPORT for Croatia and AN IMPORT
for Hungary. (n.sg.)
Opposites:
deficit
-
surplus
earnings
-
expenditure
debit
-
credit
exports
-
imports
trade liberalisation, free trade-
protectionism
visible trade
-
invisible trade
developed countries
-
developing countries, less
developed countries
(LDC), underdeveloped
countries
BALANCE OF PAYMENTS
 «A nations' balance of payments records all transactions
between its residents and the residents of other foreign
nations (including individuals, businesses and
governmental units). These transactions include all visible
exports and imports, imports and exports of services, tourist
expenditures, interest and dividends received or paid
abroad, purchases and sales of financial or real assets
abroad etc. «
Source: McConnell, C.R.., Brue, S.L. (1996). Economics. The McGraw-Hill Companies.
VISIBLE OR INVISIBLE TRADE?
EXPORTS OR IMPORTS?
e.g.This is an export for X, and an
import for Y.
1. An Englishman buys some olive oil
in France and takes it back to
England.
2. An English person buys a ticket for
the Dubrovnik summer festival.
3. An Italian working in England buys
an Italian car in England.
VISIBLE OR INVISIBLE TRADE?
EXPORTS OR IMPORTS?
e.g.This is an export for X, and an
import for Y.
4. A German buys a ticket to watch an
American band play in Germany.
5. A Norwegian ship carries frozen
lamb from New Zealand to England.
6. A Canadian ship owner insures his
ship in London.
Balance of Payments vs Balance of Trade
Fill in the missing words: exports, credits,
surplus, invisible, imports
 The relationship of visible trade exports to
imports is reflected in a country’s balance
of trade. A 1… in the balance of trade
occurs when exports exceed imports and a
deficit occurs when 2… are greater than
3… . The balance of trade is the major
component of a country’s balance of
payments, which also includes debits and
4… resulting from 5… trade.
Source: http://www.britannica.com/EBchecked/topic/630560/visible-trade
Fill in the missing words: exports,
credits, surplus, invisible, imports
 The relationship of visible trade exports to
imports is reflected in a country’s balance
of trade. A SURPLUS in the balance of
trade occurs when exports exceed imports
and a deficit occurs when IMPORTS are
greater than EXPORTS. The balance of
trade is the major component of a
country’s balance of payments, which also
includes debits and CREDITS resulting
from INVISIBLE trade.
Source: http://www.britannica.com/EBchecked/topic/630560/visible-trade
What does the BoP consist of?
Where does money come from and go?
 Within the BOP there are three separate
categories under which different transactions
are categorized: the current account, the
capital account and the financial account. In
the current account, goods, services, income
and current transfers (e.g. donations, foreign
pensions) are recorded. In the capital account,
physical assets such as a building or a factory
are recorded. And in the financial account,
assets pertaining to international monetary
flows of, for example, business or portfolio
investments, are noted. Source:www.investopedia.com
What does the BoP consist of?
Where does money come from and go?
 Within the BOP there are three separate
categories under which different transactions
are categorized: the current account, the
capital account and the financial account. In
the current account, goods, services, income
and current transfers (e.g. donations, foreign
pensions) are recorded. In the capital
account, physical assets such as a building or
a factory are recorded. And in the financial
account, assets pertaining to international
monetary flows of, for example, business or
portfolio investments, are noted.
Source:www.investopedia.com
Trade - Headlines
 UK trade deficit narrows slightly
(Jan, 2013)
 US trade deficit declined in May
(2012)
 China posts massive trade deficit
(March, 2012)
 China posts surprise trade surplus
(March, 2013)
Which of the three headlines
are explained here?
 a rise in the sale of goods and
services to other areas of the global
economy
 faltering demand for Chinese goods in
the EU and other markets, export
factories slow to reopen after Chinese
New Year, imports grow at a strong
pace.
 cheaper oil that reduced imports and
an increase in exports to Europe and
Translate the following:
 Izvoz zlata popravlja trgovinsku
bilancu
Aug, 2012
 Bez deficita tekućeg računa platne
bilance u 2013 Banka, Dec, 2012
 Hrvatski izvoz zaostaje za izvozom
usporedivih zemalja, a njegov se udio
na tržištu EU-a u 2012. godini, nakon
višegodišnje stagnacije, počeo i
smanjivati. No, obzirom na slabu
potrošnju, izvoz će sljedeće godine biti
veći od uvoza.
PROTECTIONISM vs.FREE TRADE
(in favour or against free trade?)







trade barriers
protectionism
quotas
open borders
tariffs
laissez-faire
deregulation
 strategic
industries
 liberalise
 subsidise
 infant industries
 restrictions
 customs duties
 import
substitution
Match the two columns:







Comparative
To raise
Real
Absolute
Comparative
Factors of
Division of







labour
production
income
cost principle
living standards
advantage
advantage
WTO
“The World Trade Organization (WTO) is
the only international organization
dealing with the global rules of trade
between nations. Its main function is
to ensure that trade flows as
smoothly, predictably and freely as
possible.” (www.wto.org)
Benefits & misunderstandings?
 Explain how the WTO sees itself by
showing its benefits and a list of
possible misunderstandings. (WTO web
sites)
 Match the list with the ex. in MK, 2010,
p.134/135
 Explain the WTO position in the US
Clean Air Act and the Endangered
Species Act. How does the WTO justify
its position? (WTO web-sites)