Ch.10 The Global Ch.10 The Global EconomyEconomy

10.2 Global Competition10.2 Global CompetitionObjectives: Objectives:

Describe free tradeDescribe free trade

Indicate who benefits and who does not benefit Indicate who benefits and who does not benefit from free tradefrom free trade

ProtectionismProtectionism

Protectionism: the practice of the Protectionism: the practice of the government putting limits on foreign trade government putting limits on foreign trade to protect businesses at home.to protect businesses at home.• Foreign competition can lower the demand for Foreign competition can lower the demand for

products made at homeproducts made at home• Companies at home need to be protected from Companies at home need to be protected from

unfair foreign competition.unfair foreign competition.• Industries that make products related to Industries that make products related to

national defense need to be protectednational defense need to be protected• Use of cheaper labor in other countries can Use of cheaper labor in other countries can

lower wages or threaten jobs at homelower wages or threaten jobs at home

Protectionism, cont’dProtectionism, cont’d

Tariff: a tax placed on imports to increase Tariff: a tax placed on imports to increase their price in the domestic market.their price in the domestic market.

Quota: a limit placed on quantities of a Quota: a limit placed on quantities of a product that can be imported.product that can be imported.

Embargo: a ban on the import or export of Embargo: a ban on the import or export of a product.a product.• Rare and usually used against another country Rare and usually used against another country

for political or military reasons.for political or military reasons.• Current embargoes:Current embargoes:

Cuba, Iran, North Korea, Syria, and China (weapons)Cuba, Iran, North Korea, Syria, and China (weapons)

Free TradeFree Trade

Free Trade: occurs when there are few or Free Trade: occurs when there are few or no limits on trade between countries.no limits on trade between countries.• It opens up new markets in other countriesIt opens up new markets in other countries• It creates new jobs, especially in areas related It creates new jobs, especially in areas related

to global trade, such as shipping, banking, and to global trade, such as shipping, banking, and communicationcommunication

• Competition forces companies to be more Competition forces companies to be more efficient and productiveefficient and productive

• Consumers have more choices in the variety, Consumers have more choices in the variety, prices, and quality of productsprices, and quality of products

• It helps countries raise their standard of livingIt helps countries raise their standard of living

Trade AlliancesTrade Alliances

NAFTA: North American Free Trade NAFTA: North American Free Trade AgreementAgreement• United States, Canada, and MexicoUnited States, Canada, and Mexico

EU: European UnionEU: European Union• Most European countriesMost European countries

ASAN: Association of Southeast Asian ASAN: Association of Southeast Asian NationsNations• Southeast Asian countriesSoutheast Asian countries

HomeworkHomework

Section 10.2 Reading Activity and Section 10.2 Reading Activity and Graphic OrganizerGraphic Organizer