March 18/19, 2015
Warmups:
Announcements:
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April 2, Due:
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Macro bodies project
Vocabulary journal
Study Guide
Unit 5 notebook
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Stop by the media center
w/cards for Vineyard
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EQ
What is the difference
between balance of trade
and balance of
payments?
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Standard SSEIN2
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IF the U.S. has imports
worth $9 billion and its
exports are worth $8
billion.
The U.S. has a what?
Define voluntary trade
Define export
Agenda:
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Notes
Graded class activity.
a)
b)
c)
d)
e)
Define trade barriers as tariffs, quotas,
embargoes, standards, and subsidies.
Identify costs and benefits of trade barriers over
time.
List specific examples of trade barriers.
List specific examples of trading blocks such as
the EU, NAFTA, and ASEAN.
Evaluate arguments for and against free trade.
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Free Traders:
favor fewer or even no
trade restrictions
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Protectionists:
favor trade barriers
that protect domestic
industries
Benefits of Barriers
• provides revenue to
importing country
• Protects domestic
producers of similar
goods
• Protects consumers from
sub-standard quality
• Helps businesses offset
losses from international
trade
Costs of Barriers
• Retaliation from other
country
• Higher prices for
consumers
• Inefficient use of
resources
• No supply or limited
supply of goods
Trading Blocs
• A group of countries that
come together to eliminate
trade barriers in their region.
• EU = European Union = 27
countries, Euro
• NAFTA = North American Free
Trade Agreement
• ASEAN = Association of South
East Asian Nations. Indonesia,
Malaysia, Philippines, Laos,
Cambodia, Vietnam, etc.
• OPEC: Organization of the
Petroleum Exporting
Countries. Middle East and
Venezuela
Reasons for Barriers
• Protecting infant
industries
• Protecting national
security
• Protecting domestic
employment
• Protecting workers in
developing countries from
unfair labor practices
• Protecting the
environment in
developing countries.
The Issue
Free trade
Promoting • Protection will be
infant
removed
industries
• Can’t predict which
industries will grow
• Retaliation from other
countries
Protecting
Domestic
Jobs
From
Developing
Countries
• Best not to interfere
• Prices higher b/c
protectionism
• Free trade = new
industries and jobs
• Let them produce
goods = become
consumers
Protectionism
• Industries need to
gain strength before
competing globally
• Need to grow and
establish economies
of scale
• Protects workers
from unemployment
due to cheap labor
in developing
countries
The Issue
Free trade
Protectionism
National
Defense
• Disadvantages of a
smaller supply
• Potential for abuse
• What happens
during war?
• Maintain industries
critical to national
security
Environment
• Too expensive for
developing nations
to follow
• Richer the nation,
more the citizens
demand better
environment
• Used to support
restrictions on trade
with countries w/lax
environmental
standards
Balance of
payments
dollars return to
stimulate employment
Restrictions help
balance
Types of Barriers
• Trade Barrier = a law or
action to restrict the flow
of goods and services
between two countries.
• Tariff = a tax placed on
goods when they are
imported into a country.
• Quota = a limit on the
quantity of a good
imported into a country.
Types of Barriers
• Embargo =
– a complete ban on trade
– Done for political purposes
• Standards = requirements
that a good must meet
before it can enter the
country as an import.
• Subsidies = Government
gives money to a business
to offset loss.
Examples
• 2002 U. S. Tariffs on
Steel: Bush issued tariffs
on imported steel.
• 2005 Quotas on China’s
Textiles = new free trade
rules from World Trade
Organization U.S. and
Europe lifted textile
quotas in place for
decades.
• U.S. Embargo against
Cuba, 1960-Present
Examples
• USDA Labeling Standards
= U.S. Dept. of Ag
requires all foods
entering the U.S. to have
proper nutritional and
ingredient labeling.
• U.S. Agricultural
Subsidies = allows
farmers to compete in
world markets where
prices are lower