Today’s Schedule – 12/7

• Trade Barriers and Agreements PPT• Free Trade Discussion/Debate• International Trade Project• HW–Read 18.2

Trade Barriers

• Preventing a foreign G or S from freely entering a nation’s territory

Import Quotas

• Limit on the amount of a G or S that can be imported–Often done to give U.S. businesses an

advantage in the U.S. market•Ex: Cotton

Tariffs

• Tax on imported goods• Custom Duty- a tax on certain items

purchased abroad

Effects of Trade Barriers• Limit supply• Limit specialization• Increased prices–Tariffs imposed on businesses are

passed along to consumer• Trade wars–Retaliation against a country

Arguments in Support of Trade Barriers• Protect jobs–Preventing foreign competition

• Protects infant industries –From more mature companies

• Necessary for national security–In time of war, want to produce G in the

U.S.• Protects foreign workers

Arguments For Free Trade• Forces specialization–Focus on industry nation is best at producing–Force workers to obtain skills necessary to

produce that G or S• Provides jobs and increased wages to workers

in other countries• Keeps prices low–Forces competition among domestic and

foreign businesses

International Trade Agreements

• Cooperation between at least two countries to reduce trade barriers and tariffs and to trade with one another• MFN Status–All countries with this status receive the

same benefits as given to one

International Trade Agreements

• World Trade Organization–Sponsor conferences to negotiate

reduced trade barriers–Enforces trade rules/agreements

• European Union–Collective of European countries who

act like one market

International Trade Agreements

• NAFTA–Free trade among Canada, U.S. and

Mexico•All tariffs to be eliminated by 2009

–Major protest over this•Move factories to Mexico along with jobs

International Trade Agreements

• APEC- Pacific Rim Countries• MERCOSUR- South American Countries• CARICOM- Caribbean Countries