The Dynamic Environment of International Trade: Cateora and Graham

The Dynamic Environment of
International Trade
Cateora and Graham

Chapter 2
1
Agenda
 Trade Agreements and Organizations
 Balance of Payments
 Protectionism
 Easing Trade Restrictions
 Opposition to Global Institutions
 The Internet and Global Business
2
Major Trade Agreements and
Organization
 General Agreement on Tariffs and Trade
(GATT)
 North American Free Trade Area (NAFTA)
 European Union (EU)
 ASEAN Free Trade Area (AFTA)
 Asia-Pacific Economic Cooperation (APEC)
 World Trade Organization (WTO)
3
Balance of Payments
 It represents the difference between
receipts from foreign countries and
payments made to them.
 The positive side is represented by exports.
 The negative side is represented by
imports.
4
Balance of Payments Cont.
 Current Account
 A record of all merchandise exports,
imports, and services plus unilateral
transfers of funds.
 Capital Account
 A record of direct investment, portfolio
investment, and short-term capital
movements to and from a country.
5
Balance of Payments Cont.
 Official Reserve Account
 A record of exports and imports of gold,
increases and decreases of foreign
exchange, or increases and decreases in
liabilities to foreign central banks.
6
Protectionism
 Protectionism is the act of putting a
trade barrier in place in order to protect
a domestic industry or company.
 Cost to the consumer of protectionism:
 U.S. consumers pay $70 billion in higher
prices
 This equates to $170,000 per job saved.
7
Arguments for Protectionism
 Protection of an infant industry
 Protection of the home market
 Need to keep money home
 Encouragement of capital accumulation
 Maintenance of standard of living and
real wages
 Conservation of natural resources
8
Arguments for Protectionism
Cont.
 Industrialization of a low wage nation
 Maintenance of employment and
reduction of unemployment
 National defense
 Increase of business size
 Retaliation and bargaining
9
Types of Protectionism
 Tariffs
 A tax imposed by the government on goods
coming in domestically.
 Quotas
 A specific unit or dollar amount allowed for a
particular type of good.
 Voluntary Export Restraints
 This is where the two countries trading agree on a
certain restriction on the volume of exports.
10
Types of Protectionism Cont.
 Boycotts
 A complete prohibition on the purchase
and importation of certain goods from
other countries.
 Monetary Barriers
 Blocked currency
 Differential exchange rates
 Government approval requirements for
securing foreign exchange
11
Types of Protectionism Cont.
 Standards
 This is a nontariff barrier which requires
the imported item to have a particular set
of characteristics.
 Antidumping Penalties
 A penalty assessed on products that are
sold below their cost of production.
12
General Agreements on Tariffs
and Trades (GATT)
 It was an agreement between the U.S. and
22 other countries to set-up an agency to
serve as an intermediary over world trade.
 Established after WWII.
 It offered nations a forum for negotiating
trade and related issues.
 There have been eight rounds of
intergovernmental tariff negotiations.
13
Basic Elements of GATT
 Trade was conducted on a nondiscriminatory
basis.
 Protection was afforded domestic industries
through custom tariffs, not through such
commercial measures as import quotas.
 Consultation was us used as the primary
method used to solve trade problems.
14
World Trade Organization
(WTO)
 In 1995, the WTO was set-up as a
successor of GATT.
 Whereas GATT was an agreement, the
WTO is an institution.
 It has approximately 133 members.
15
World Trade Organization
(WTO) Cont.
 It provides a panel of experts that hear
and rule on trade disputes.
 Decisions made by the WTO are
binding, unlike what occurred with
GATT.
 It meets at least every two years.
 It has no power to enforce its decisions
accept through “peer pressure.”
16
Facilitators for Trade
 The International Monetary Fund (IMF)
and the World Bank Group are global
institutions that assist nations in
becoming and remaining economically
viable.
 In essence, these are the banks for use by
country governments.
17
Protest to Global Institutions
 Environmental concerns
 Worker exploitation
 Cultural extinction
 Higher oil prices
 Diminished sovereignty of nations
 Protection of domestic industries
18
Global Business and the
Internet
 Benefit
 It brings a global market to your business.
 It allows you to provide better customer
service to your customers no matter where
they are in the world.
 Challenge
 When marketing, you must consider that a
marketing campaign potentially reaches
the entire world.
19

The Dynamic Environment of International Trade: Cateora and Graham

Uploaded by

Copyright:

Available Formats

The Dynamic Environment of International Trade: Cateora and Graham

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Dynamic Environment of International Trade: Cateora and Graham

Uploaded by

Copyright:

Available Formats

The Dynamic Environment of

Cateora and Graham

You might also like