Matakuliah
Tahun
: J0114-Teori Ekonomi
: 2009
INTERNATIONAL TRADE
Pertemuan 25
Some Key Facts
• U.S. Trade Deficit $782 Billion in Goods in
2005
• U.S. Trade Surplus $58 Billion in Services in
2005
• U.S. Exports Chemicals, Consumer
Durables, Agricultural Products,
Semiconductors
• U.S. Imports Petroleum, Automobiles,
Appliances, Computers
• Some of Same Categories are Exported and
Imported
• Canada Largest U.S. Partner Quantitatively
Bina Nusantara University
3
Some Key Facts
•
•
•
•
•
•
•
U.S. Sizable Trade Deficit with China
U.S. Dependence on Oil is Reflected
U.S. has World’s Highest Trading Volume
Exports are 11% of U.S. Output
China a Major Trade Force
International Trade Links World Economies
International Trade is the Center of Policy Debates
Bina Nusantara University
4
Some Key Facts
Shares of World Exports, Selected Nations
Percentage Share of World Exports, 2004
0
Germany
United States
China
Japan
France
Netherlands
Italy
United Kingdom
2
4
6
8
10
12
10.0
8.9
6.5
6.2
4.9
3.9
3.8
3.8
Bina Nusantara University
5
Source: World Trade Organization
The Economic Basis for Trade
•
•
•
•
Labor-Intensive Goods
Land-Intensive Goods
Capital-Intensive Goods
Comparative Advantage
– Graphical Analysis
– Two Isolated Nations
•
•
•
•
Constant Costs
Different Costs
U.S. Absolute Advantage in Both Products
Opportunity Cost Ratio
Graphically…
Bina Nusantara University
6
The Economic Basis for Trade
(b) Brazil
40
40
35
35
30
30
Coffee (Tons)
Coffee (Tons)
(a) United States
25
25
20
15
20
15
12
A
10
10
5
4
5
B
18
Bina Nusantara University
0
5
10
15
20
Wheat (Tons)
25
30
0
7
5 8 10
Wheat (Tons)
15
20
The Economic Basis for Trade
• Self-Sufficiency Output Mix
• Specializing Based on Comparative
Advantage
– Principle of Comparative Advantage
• Terms of Trade
– 1W ≡ 1C in the U.S.
– 1W ≡ 2C in Brazil
• Gains from Trade
• Trading Possibility Line
– Improved Options
– Added Output
Bina Nusantara University
8
45
C’
The Economic Basis45 for Trade
(a) United States
40
40
35
35
Trading
Possibilities Line
30 C
30
Coffee (Tons)
Coffee (Tons)
(b) Brazil
25
20
A’
15
12
10
20
c
15
A
10
5
5
4
W
Bina Nusantara University
0
Trading
Possibilities Line
25
5
10
15 18 20
Wheat (Tons)
25
30
0
B’ B
w
w’
5 8 10
15
Wheat (Tons)
9
20
Supply and Demand Analysis of
Exports and Imports
• World Price
• Domestic Price
• Supply and Demand in the United States
– U.S. Export Supply
• Export Supply Curve
– U.S. Import Demand
• Import Demand Curve
Bina Nusantara University
10
Supply and Demand Analysis of
Exports and Imports
U.S. Aluminum Market
Price (Per Pound; U.S. Dollars
Surplus = 100
(b) U.S. Export Supply
and Import Demand
Sd
1.50
1.50
Surplus = 50
c
1.25
1.25
1.00
1.00
.75
Shortage = 50
.50
0
50
75
100
125
Quantity of Aluminum
(Millions of Pounds)
b
U.S.
Export
Supply
a
U.S.
Import
Demand
.75
x
.50
y
Dd
Shortage = 100
Bina Nusantara University
Price (Per Pound; U.S. Dollars
(a) U.S. Domestic
Aluminum Market
150
0
50
100
Quantity of Aluminum
(Millions of Pounds)
11
Supply and Demand Analysis of
Exports and Imports
Canadian Aluminum Market
(b) Canada’s Export Supply
and Import Demand
1.50
1.50
Surplus = 100
Sd
1.25
1.25
Surplus = 50
s
1.00
1.00
.75
.50
Shortage = 50
0
Bina Nusantara University
Price (Per Pound; U.S. Dollars
Price (Per Pound; U.S. Dollars
(a) Canada’s Domestic
Aluminum Market
50
75
100
125
Quantity of Aluminum
(Millions of Pounds)
Dd
150
r
.75
Canadian
Export
Supply
a
Canadian
t Import
Demand
.50
0
50
100
Quantity of Aluminum
(Millions of Pounds)
12
Supply and Demand Analysis of
Exports and Imports
World Market for Aluminum
Price (Per Pound; U.S. Dollars
Equilibrium World Price and
Quantity of Exports and Imports
U.S.
Export
Supply
1.00
Canadian
Export
Supply
e
Equilibrium
.88
U.S.
Import
Demand
.75
Canadian
Import Demand
0
Bina Nusantara University
50
100
Quantity of Aluminum
(Millions of Pounds)
13
Trade Barriers
•
•
•
•
•
•
Bina Nusantara University
Revenue Tariff
Protective Tariff
Import Quota
Nontariff Barrier (NTB)
Voluntary Export Restriction (VER)
Economic Impact of Tariffs
– Direct Effects
• Decline in Consumption
• Increased Domestic Production
• Decline in Imports
• Tariff Revenue
– Indirect Effect
14
Trade Barriers
Economic Effects of a Protective
Tariff or an Import Quota
Sd
Price
Sd + Q
Pd
Pt
Pw
Dd
Bina Nusantara University
0
a
b
Q
c d
15
Trade Barriers
• The Case for Protection: A Critical Review
– Military Self-Sufficiency Argument
– Diversification-for-Stability Argument
– Infant Industry Argument
• Counterarguments
• Strategic Trade Policy
– Protection-Against-Dumping Argument
• Dumping
– Increased Domestic Employment Argument
• Smoot-Hawley Tariff Act
– Cheap Foreign Labor Argument
Bina Nusantara University
16
Trade Adjustment Assistance
• Trade Adjustment Assistance Act of 2002
• Offshoring
• The World Trade Organization (WTO)
– The DOHA Round
Bina Nusantara University
17