INTERNATIONAL
TRADE
INTERNATIONAL TRADE
 GLOBAL TRADE
WORLD TRADE
 REGIONAL TRADE
 FOREIGN TRADE
vs.
 LOCAL (DOMESTIC, HOME) 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.)
Find 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 statement 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. «
McConnell, Brue: Economics (1996)
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.
Fill in:
liabilities, deficit, current account, record,
transactions, assets, credit, debit, payments




The balance of 1.............(BOP) is the place where countries
2............... their monetary .3................ with the rest of the world.
Transactions are either marked as a 4............or a debit. If a country
has received money, this is known as a 5.........., and, if a country
has paid or given money, the transaction is counted as a 6...........
Theoretically, the BOP should be zero, meaning that ...........(credits)
and 7................(debits) should balance. But in practice this is rarely
the case and, thus, the BOP can tell the observer if a country has a
8.................or a surplus.
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 9......................., goods, services, income and current
transfers are recorded. In the capital account, physical 10..............
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.
http://www.investopedia.com/articles/03/061803.asp
BALANCE OF TRADE DEFICIT
(TRADE DEFICIT)
BALANCE OF TRADE SURPLUS
(TRADE SURPLUS)
BALANCE OF PAYMENTS DEFICIT
BALANCE OF PAYMENTS SURPLUS
Match the two columns:
(based on MacKenzie, p.156, pg.1)







Comparative
Raise
Real
Absolute
Comparative
Factors of
Division of







labour
production
income
cost principle
living standards
advantage
advantage
PROTECTIONISM
vs.
FREE TRADE







trade barriers
protectionism
quotas
open borders
tariffs
laissez-faire
deregulation
 strategic
industries
 liberalise
 subsidise
 infant industries
 restrictions
 customs duties
 import
substitution
How would you classify the words from the
previous slide (protectionism vs. free
trade)?
In favour of free
trade:
Against free trade:
Trade Regulations and Croatia
 WTO
 Harmonise with EU
rules
 Trade in (textiles)
 Transition period
 Range from … to …





Lift customs duties
Account for x%
Accession
Interim agreement
Bilateral relations
Source: R: p.28
What do the figures stand for?







30
2003, 0.0-17.6%
Less than 10%
3%
22-24%
2001
50%





17%
¼
2000
2003
2009
Source: R:p.28
PROTECTIONISM AND FREE
TRADE

to
impose
ease
lower
remove
lift
tariffs/quotas, ...

elections / tariffs, quotas / strategic industries /
unemployment – link? (pg.3)

reasons for trade barriers (p.156, pg.3,4)

Differences: tariffs, quotas and other non-tariff barriers
(pg.5)
TOWARDS FREE TRADE
GATT and WTO
 GATT objectives and the WTO
(pg.6)
The MFN clause
 Trading blocks:
e.g. EU, NAFTA, ...
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)
issues negotiated within the WTO

agriculture (subsidies distorting prices)
e.g. 18 Dec 05, Hong Kong
“World Trade Organisation ministers reached a compromise
agreement in Hong Kong, that sets an end-date of 2013 for
farm export subsidies and offers export help to the world’s
poorest nations.” (Financial Times)
“After securing commitments from others to reform their own
export subsidies, the EU has offered to eliminate its export
refund system by 2013, conditional on similar moves from
others.” (europa.eu.int)

industrial products, services, intellectual property,
investment, competition, transparency in government
procurement, trade facilitation, anti-dumping, subsidies,
regional trade agreements, trade and environment
DEVELOPING COUNTRIES AND
FREE TRADE
Developing countries... (pg.7, 8, 9)
 opposed.................................
 saw......................................
 wanted.................................
 practised.................................
 imposed.................................
 have.................................
 are unable.................................
 need to.................................
 are aware of........................
 are afraid of.........................
 tend to ...............................
THE BANANA WAR (MK: p.159)
1. How does reduction of trade barriers
affect international trade?
2. How did the EU protect British and
French colonies?
3. What did the US do? Why?
4. What were the EU arguments?
5. How did the trade dispute end?