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SY:2012-2013
International Trade
An Overview to the International Trade
International Trade
Food
Wine
Clothes
Stock
Spare Parts
Currencies
Oil Jewelry
Reference: http://www.wto.org/english/res_e/statis_e/its2012_e/its12_trade_category_e.htm
Reference: http://www.wto.org/english/res_e/statis_e/its2012_e/its12_trade_category_e.htm
The Growth in World Trade
about 15 percent of the world's output is
traded in international markets in a typical
year.
Reference:
Sexton, R.L. (2011). The Exploration of Macroeconomics. (5th ed.) China:
China Translation & Printing
The Growth in World Trade
Year 1947: saw the creation of the GATT
(General Agreement on Tariffs and Trade)
as an attempt to reduce such barriers to trade
as quotas, subsidies, tariffs and taxes.
In 1997 GATT was
replaced by the WTO
(World Trade
Organization), its mandate
expanded to include
intellectual property rights
and foreign investment.
Reference:
Sexton, R.L. (2011). The Exploration of Macroeconomics. (5th ed.) China:
China Translation & Printing
World Trade Organizations
only global international
organization dealing with
the rules of trade between
nations.
Main Goal:
to help producers of
goods and services,
exporters, and importers
conduct their business.
Reference: http://wto.org/english/thewto_e/whatis_e/what_we_do_e.htm
WTO: What They do?
Reference: http://wto.org/english/thewto_e/whatis_e/what_we_do_e.htm
TRADE POLICY DEVELOPMENTS
Philippines:
continues to hold with importance its membership
in the WTO and recognizes the value of the
WTO's achievements in fostering a competitive
environment.
Reference: http://http://docsonline.wto.org
Reference: http://http://docsonline.wto.org
Absolute
Advantage
and
Comparative
Advantage
8
6
Units of food (millions)
4 8m 0.0
7m 2.2m
3 6m 4.0m
5m 5.0m
4m 5.6m
2 3m 6.0m
2m 6.4m
1m 6.7m
1
0 7.0m
0
0 1 2 3 4 5 6 7 8
Units of clothing (millions)
8
a
7
6
Units of food (millions)
4 a 8m 0.0
7m 2.2m
3 6m 4.0m
5m 5.0m
4m 5.6m
2 3m 6.0m
2m 6.4m
1m 6.7m
1
0 7.0m
0
0 1 2 3 4 5 6 7 8
Units of clothing (millions)
8
b
7
6
Units of food (millions)
4 8m 0.0
b 7m 2.2m
3 6m 4.0m
5m 5.0m
4m 5.6m
2 3m 6.0m
2m 6.4m
1m 6.7m
1
0 7.0m
0
0 1 2 3 4 5 6 7 8
Units of clothing (millions)
8
c
6
Units of food (millions)
4 8m 0.0
7m 2.2m
3 c 6m 4.0m
5m 5.0m
4m 5.6m
2 3m 6.0m
2m 6.4m
1m 6.7m
1
0 7.0m
0
0 1 2 3 4 5 6 7 8
Units of clothing (millions)
Opportunity Cost
Absolute Advantage
Comparative Advantage
Tariff
Non-tariff
Tariff Trade Barrier
a tax on goods
shipped
internationally
A price-based barrier
Tariffs: Types of tariffs
Import and export tariffs: a tax
levied on imports or exports of a
country.
Transit tariff: a tax levied on
goods passing through the country.
Tariffs: Types of tariffs
Specific duty: a tariff based on the
number of items being imported.
Ad valorem duty: a tariff based on a
percentage of the value of imported
goods.
Compound duty: a tariff consisting
of both a specific and ad valorem
duty.
Non- Tariff Trade Barrier
Quota
Subsidies
Import Quotas
A legal limit on the imported quantity of
a good that is produced abroad and
can be sold in domestic markets
Export Subsidies
Government payments made to
domestic firms to encourage exports.
Closely related to subsidies is
dumping.
A firm or industry sells products on the
world market at prices below the cost of
production.
Reasons for Trade
Barriers
Domestic Employment
Low foreign wages
Infant Industry
Unfair Trade
National Security
In International Trade
Excess of what a consumer is willing to pay to
what he actually has to pay.
6
CS
5 CS
CS
Price
4
PS
3 PS
PS D
2
1 2 3 4
Quantity
Domestic producers gain more than domestic
consumers lose.
Domestic consumers gain more than
domestic producers lose.
If the price of a good or service of Country X
increases, the quantity of goods or services offered by
suppliers, foreign and domestic, increases and vice
versa.