TRADE
LESSON AIMS:
• What is trade?
• How is international trade controlled by certain countries?
• What are the rules of international trade?
"Before you've finished your
breakfast this morning, you'll
have relied on half the world"
Martin Luther King
What is trade?
• Trade is the exchange of goods and services
between one country and another.
• Goods bought into a country are called
imports, and those sold to another country
are called exports.
http://www.bbc.co.uk/schools/gcsebitesize/geography
/development/trade_video.shtml
• Usually, MEDC’s export valuable manufactured
goods such as electronics and cars and import
cheaper primary products such as tea and coffee.
• In LEDC’s the opposite is true. This means that
LEDC’s have little purchasing power, making it
difficult for them to pay off their debts or escape
from poverty
• The price of primary products fluctuates on the
world market which means that workers and
producers in LEDC’s lose out when the price drops.
• The price of manufactured goods is steadier which
means that MEDC’s always benefit.
Task One
• Using the worksheet match the key terms and
the definitions.
• Each one needs to be written out fully in your
books.
Governments interfere with
international trade…
• Increasing trade and reducing their balance of trade deficit is
essential for the development of LEDC’s.
• However, sometimes MEDC’s impose tariffs and quotas on
imports.
• Tariffs are taxes imposed on imports, which makes foreign
goods more expensive to the consumer.
• Quotas are limits on the amount of goods imported and
usually work in the MEDC's favour.
• Subsidies are payments made by a government to a
producer in it’s country.
Advantages and Disadvantages
ADVANTAGES TO MEDC’S
DISADVANTAGES FOR LEDC’S
•
The price of manufactured
goods has increased
steadily
•
The price of raw materials has fallen
compared to the price of
manufactured goods
•
MEDC’s are becoming
richer so are able to import
more raw materials from
LEDC’s
•
LEDC’s cannot afford to import the
manufactured goods they need
•
The price of raw materials is not
stable. When there is a surplus, prices
fall and LEDC’s earn even less
•
Exploitation of raw materials may
damage the environment
•
This all increases the dependency of
LEDC’s on MEDC’s
•
Competition between
LEDC’s ensures MEDC’s
can buy goods for the
lowest possible prices.
Why do rules of trade make it difficult for
LEDC’s to sell imports into a European
Union (EU) country like the UK?
Think about these things below
UNITED STATES, JAPAN,
CANADA AND THE
EUROPEAN UNION
COMPETITION – EU
goods v. LEDC goods
TARIFFS, QUOTAS AND
SUBSIDIES
PROTECTING YOUR OWN
FARMERS / WORKERS
UNITED STATES, JAPAN, CANADA AND THE
EUROPEAN UNION
• The big problem with trade is that it is mostly
controlled by a very powerful group of
countries.
TARIFFS, QUOTAS AND SUBSIDIES
PROTECTING YOUR OWN FARMERS /
WORKERS
• These countries use tariffs, quotas and
subsidies for many years to protect their
workers and farmers from competition abroad
and they have no intention of stopping.
COMPETITION – EU GOODS v. LEDC GOODS
• For many African countries, this system can be very
unfair.
• Products would be very expensive in the UK because
when the products are imported into the EU, a tariff
would be charged.
• EU goods would not have this tariff – they could also
been given a subsidy to make them even cheaper.
What is DUMPING and how is it bad for
LEDC’s?
• Because of the subsidies paid in the EU, we often
overproduce things – especially certain foods and
drinks.
• This then gets dumped into LEDC’s ay prices lower
than a farmer could produce it.
• Cheap food to LEDC’s may be considered good –
but in reality it puts farmers out of business.
• In your own words, explain ‘Dumping’ and why it
is bad.