Export cars_1 French

When the French cars have dominated the world - When the world dominated French Cars

The economic basis for specialization and trade - comparative advantage and trade.
The differences in opportunity costs comparative advantage.
Specialization, Exchange and gains from trade.
Why Trade Barriers Exist - special effects of interest.

The costs of trade barriers are much higher than the benefits.
Trade barriers have a negative impact on income distribution i e they hurt the poor more than the rich.
Trade restrictions in the most developed countries have a negative impact on the populations of the least developed countries.
First, we learned that to achieve productive efficiency namely to produce cheaply and therefore produce more we must use the resources where they are better This means that secretaries should enter letters and truck drivers should drive trucks it also means that farmers in Honduras should develop sugar and farmers in North Dakota should grow potatoes this way, more sugar and potatoes will be grown THEN we can trade with Honduras by giving them our potatoes for their sugar, the result will be that we can both have more sugar and potatoes.
Furthermore, we learned that free trade ith Joining the global economy is one of the structural adjustment policies that countries are undertaking worldwide.

Privatization 1 2 3 Promoting Competition Limited and reoriented role for Government Reform 4 Removing price controls 5 Membership in the global economy free trade 6 macroeconomic stability.
Third, we have learned that the curve of production possibilities is the maximum amount of two products that can be produced by a country - by itself without trading any point on the blue line below But with the trade of a country can consume quantities beyond what they can produce themselves as point a on the chart below.
Here we will add to our understanding of trade by introducing the very important concept of comparative advantage.
major economic changes have occurred in recent decades countries worldwide, including the United States are currently engaged in a process of globalization and structural adjustment This includes, among other things, moving towards globalization freely trade and the removal of trade barriers is happening now and will continue to occur in the previous conference, noted that much of what we hear in the popular press is contrary to what we will learn in this course this is very true when discussing globalization for example, read the following quotes from the news article Dobbs CNN new Congress must be brave.

Lou Dobbs, CNN commentator and best-selling author News, said.
But the consequences of free trade based on faith will be eye-popping in the disaster it wreaks on our economy and American workers.
I hope that the new leaders of the Democratic Congress may recognize that so-called free trade came to a disproportionate cost for men and women in this country.
We lost three million manufacturing jobs because of these so-called free trade agreements that allow US companies to export plants, production and jobs to foreign labor markets cheap.

Yet we persist with our ignorance of history, and we continue to conclude poorly negotiated agreements that constitute great threats to the U S economy and the middle class.
Then read the following quotes from our manual.
P 90 Nations specialized and trade for the same reasons that individuals and specialization of exchange results in a more global output and income.
P 92 specialized trade ith improves overall resource allocation The same entries of global resources and the result of technology in higher global production.
P 354 import restrictions to change the composition of employment, but they have little or no effect on the volume of employment.

P 95 - In fact, the real benefit created by international trade is the overall increase in production obtained through specialization and exchange.
P 352 - gains that barriers to US trade create for protected industries at the expense of much higher losses for the entire economy added emphasis.
P 351 - Study after study finds that costs to consumers trade restrictions far exceed the gains to producers and the government.
Specialization based on the results of comparative advantage in a more efficient allocation of world resources, and the most important results McConnell and Brue, 2005, p 361.
Many people who favor trade restrictions those who oppose the use of free trade anecdotal evidence show that trade can be harmful An example is the book in America who stole the dream of Donald L Barlett and James B Steele with chapter titles like How US Policies much are American jobs, Importing goods, exporting jobs and label Made in danger in the United States it is clear that they believe that free trade results in loss of jobs and is detrimental to our economy, however, further investigation will show that they support their case that anecdotal evidence rather than scientific research they interview people who lost their jobs when the factory moved to the foreign and state that this is proof that free trade is bad, but ignore much trade is costing us jobs, but it creates a succeeded trade jobs also results in lower prices, more production, economic growth and better living standards.

Most economists believe that the benefits of free trade far outweigh the costs Read on to.
Why the arguments of people who oppose free trade like Lou Dobbs, and Barlett and Steele sound so good when economists clearly support free trade.
The following news article online CNN provides a good explanation.
If you think like an economist, then you would have answered A five questions Yes, A to all questions.
As we discussed in our conference 5E, the goal of economic activity is to reduce the shortage and meet the man wants the goal of economic activity is then to reduce the shortage or improve consumer welfare work is considered as a cost - something that people would avoid if they could we would not work, we want bigger boats an economy where everyone has to work 18 hours a day to stay alive is not successful imports, where more goods arrive in a country, are considered an advantage - remember the goal is to get more goods exports, we send our goods to someone else, are considered a cost - or loss finally, the trade objective is to reduce the shortage or get cheap goods.

Although there are no correct answers to the quiz, it should remind us that we are studying the best way to reduce the shortage.
Adam Smith observed in 1776 that specialization and trade increase the productivity of a nation Her observation resources related to the principle of absolute advantage by which a country should buy from other countries if they can provide less expensive than us.
Trade or international trade or commerce between Illinois and Alabama, or trade between you and Walmart, is based on production efficiency ie more power or more vessels acquired through specialization or using resources where they are best suited.
One way to understand the benefits of trade specialization and exchange e i is to answer this question.
What would life be like if you were self.
What would your life if you have any product your own food, clothing, energy, your home, your car, your computer if you didn t buy anything ie if you don t trade and you have product for all you.

But if you specialize, for example, I teach economics and buy what you want to trade, you will have a much higher level of life This is the advantage of specialization and exchange - or trade.
Enlarge total and therefore higher living standard production.
So we have a choice to make whether we can join the world economy become more dependent on other countries, and enjoy a better standard of living or we can restrict trade and try to do it alone, we will be more independent, but much worse.
There are four reasons why trade specialization and trade increase our standard of living.
One difference b differences in resource endowments preferences c differences in the productivity differences of opportunity costs.
The United States has a lot of good farmland and Saudi Arabia has a lot of oil and little good farmland So we both can gain if we sell the wheat and they sell us oil This reduces the shortage giving us more satisfaction than the same amount of resources.

Although both countries have the same resources they my to benefit from trade if they have different preferences, let's assume that the US and Britain has the same resources to the production of coffee tea So both country can produce both products, but in the uS, we prefer coffee and in Britain they prefer therefore tea, we can get more satisfaction from the same amount of resources if we sell our excess tea they sell us their excess coffee.
First some definitions What is the difference between the two.
Often the word PRODUCTION means that the quantity produced, for example the production of cars increased last year 10.
Productivity is output per unit of resource, usually the output per person If Joe can produce 10 bikes a day and if Jane can produce 20 bikes a day, Jane is more productive than Joe.
Production efficiency is the production at minimum cost a 5E So if Joe can produce 10 bikes a day and if Jane can produce 20 bikes a day, Jane is more productive than Joe If Joe gets 10 per day if Jane gets 40 one day, who would you hire Joe is more productive efficient producing bicycles at a cost of 1 bike, while Jane produces bicycles at a cost of 2 bicycles.

Differences in Productivity is one reason that countries benefit from trade if a country is more productive in producing a product, say they have a ABSOLUTE advantage in the production of this product.
A country has a ABSOLUTE advantage in the production of a product if it can produce with fewer resources than another country absolute advantage is the ability to produce a good or service with fewer resources due to greater productivity .
Let's see how the differences in the results of absolute advantage in productivity in specialization and trade.
Let's say there are two persons One is a lawyer, the other mechanic Let's assume that the lawyer is more productive to do the law than is the mechanic since he or she may do so by less time and the mechanic is more productive to fixing cars thus, the lawyer has an absolute advantage in law and the mechanic has an absolute advantage in fixing cars so it doesn t surprise us that he will bring to the mechanic to do repair if the car breaks the lawyer down the avocado business with the mechanic.
Now let's do a numerical example as you'll find on the exams.

Here the production possibility curves for both countries, the United States and France Note that we have assumed constant costs so that the curves are straight lines at a previous conference, we said that CCPs are concave in originally because all the resources of a country are not the same law costs more here, we assume that all resources in the United States are the same so there are constant costs and PPC is a straight line resources in France are also identical to each other, but different from the US to France also has constant cost and a right PPC.
Let's start by assuming that initially there is no trade and each country is self-sufficient - produce all its own bread and wine Let's assume that the United States to produce 40 THINGS bread and wine 30 and France produced 9 bread and wine 24 These amounts are presented in tables and graphs below.
Total production by the two countries then show in the table below 49 loaves and 54 wines This is just one possible level of total production, but it will help us understand how the two countries can benefit from trade.
Now, suggesting that each country specializes and produces more of the product in which they have an absolute advantage That means they produce more of the product in which resources are more productive in what product each country specialize Looking at production possibilities tables, we can answer this question if we assume that every country has the same amount of resources so that the data could represent output per worker then what country are state resources are more productive in the production of bread if the States States produces only bread could produce 100 bread and no wine Although France produces only bread, it can produce only 15 Thus the United States has an absolute advantage in France bread production can produce a maximum of 60 wines while the United States can produce 50 if the resources of France are more productive in wine production they have a avanta absolute age in wine production.
If both countries specialize and produce these products in which they have an absolute advantage that we will achieve a total production of 100 bread all products by the United States and 60 wines all produced by France View tables and charts below below.
Now compare the total production with a specialization based on their absolute advantage with a total production before, when they were self see table sufficient below, you can see that the same amount of resources do not forget the assumptions behind the curve production possibilities more occurred before, when self sufisamment, total production was 49 bread and wine 54 100 with specialization, we can now produce 100 bread and 60 wines with the same amount of bread 51 pLUS is produced resources 100 6 -49 and 60-54 pLUS wine This reduces the shortage by producing more output from the same amount of resources.

Results to specialization in production over the same amount of resources, but each country is now better than before Probably not the United States they have plenty of food to eat, but no wine in France and they die hunger no bread, but they are much happy wine.
Let's see if the two countries can benefit from the exchange of trade Let's assume that the United States offers the French 1 brad hungry for all their wine France would probably say no, but they offer the American thirsty wine 1 for all 100 bread the US probably refuse therefore they begin to negotiate until they find a trade that is acceptable to both parties Let's assume that they agree to exchange 20 to 32 wine bread.
The graphs below show the results of this exchange Each country produces still as before, but now after the trade they consume more the United States having exchanged 20 loaves in France still have 80 left, and they received 32 wine leaving France with 28.
Looking at the charts above and the table below, we can see the gains from trade The United States now consumes 80 bread and wine 32 This combination is outside their production possibility curve In a previous conference we said that this was impossible or unreachable But trade can be consumed more than if they were self-sufficient is the same for France when the two countries have to specialize and exchange both countries can consume quantities impossible to they produce themselves.
The differences in opportunity costs comparative advantage.

The main argument in favor of trade is the principle of comparative advantage The principle of comparative advantage was observed and explained in the early 1800s by David Ricardo This principle says that he pays for a person or a country to specialize and exchange, even if that person or nation is more productive than the potential business partners in all economic activities of specialization should take place if there are differences in costs for the production of different elements.
Comparative advantage is the ability to produce a product at a cost lower opportunity cost opportunity we defined in a lecture earlier and the value of the best alternative that is not selected following a decision.
Let's look at two examples of how this supports trade.
Suppose there is a lawyer who is also a great need auto mechanic and his car repaired prosecutor could fix it in an hour an auto mechanic could fix in two hours Note lawyer is better at fixing cars and make the law.
Let's say the car mechanic load 50 an hour to fix cars and attorney fees 200 per hour to the law.

ATTORNEY MUST SECURE THE CAR OR HAVE THE MECHANIC WHY DO.
If the prosecutor fixes the car itself, it will cost one hour of work lost in which he could have done it 200, but the mechanic fixed the car's lawyer, it will not cost you a lawyer 2:00 100 x 50 therefore, even if the lawyer is best at fixing cars and make the law, it can get to specialize in granting and exchange with the car mechanic This is due to the principle of comparative advantage at the mechanic cost of fixing the car itself is itself greater than the cost of having the mechanic fix Since the mechanic can fix the car at a cost of lower opportunity, it has a comparative advantage in setting Car and the prosecutor has a comparative advantage to law Even if the lawyer is better, more productive, two jobs, both the lawyer and the car mechanic can earn specialize and exchange trade.
Now let's do a numerical example like the ones you find on quizzes and exams.
Look at the possibilities of production of tables and graphs below for the United States and France the production of bread and radios has an absolute advantage in the production of bread Since the United States can produce 100 loaves if they occur as bread and France can produce only 15, assuming they have the same amount of resources, the United States is more productive in the production of bread in the United States has an absolute advantage in the production of bread has an absolute advantage in the production of radios again, it is the United States the United States as the above lawyer is more productive in the production of these two products.

So will they benefit from trading with France YES - but what products they specialize in trade and other country in which they have to specialize according to their comparative advantages, they should produce more of the product they can produce at a lower opportunity cost.
The first thing we need to do is calculate the opportunity costs This is similar to what we did at a previous conference.
In the US when they occur 1 radio, how much bread did they give up, if they produce no radio, they can produce 100 bread, but if they produce 25 radio stations, they can t produce bread So to 25 radio stations, they have to give up 100 bread or 4 bread for each 1 radio in France what is the cost of 1 radio in terms of bread DELIVERED if they do not produce radio, they can produce 15 bread if they produce 10 radio stations, they can t produce bread so for 10 radios, they dropped 15 bread or 1 and 1 2 1 bread for radio.
So who has a comparative advantage in the production of radios that can produce radios at a lower cost that can produce radios and give less bread The answer FRANCE USA has a more productive absolute advantage in the production of radios but France has a comparative advantage France can produce radios at a lower opportunity cost.
Who has a comparative advantage in the production of bread which can produce bread at a lower opportunity cost Which country gives up less radios for each product bread.

In the US, when they produce one bread, how many radios they give up, if they do not produce bread, they can produce 25 radio stations, but if they produce 100 bread can t produce radio So to 100 bread they give up 25 OR 1 4 wireless radios for 1 bread in France, what is the cost of one loaf in terms of radio data up if they do not produce bread, they can produce if 10 radios they produce bread 15 can produce radio t therefore 15 bread they dropped 10 radios OU 2 3 10 15 1 radios for bread.
So who has a comparative advantage in the production of bread which can produce bread at a lower cost that can produce bread and give less radio The answer is in the US The US can produce radios at a cost of lower opportunity so they have a comparative advantage in the production of bread.
Let's assume that before specialization and trade of the two countries produce the amounts indicated below, I chose these amounts as a starting point for me to show that countries benefit from trade both.
Thus, the total production without trade is 72 and bread 12 radios See table below.
Now, suggesting that each country specializes and produces more of the product in which they have a comparative advantage, we have calculated the opportunity costs and have concluded that the United States has a comparative advantage in the production of bread and France has a comparative advantage in the production of radios.
In our tests, we assume they specialize 100, which means that each country produces a product, but here as in the real world, we will produce more product in which they have a comparative advantage, but not only this.

Thus, tables and graphs below show the results of this specialization on the principle of comparative advantage note that the United States now produce more bread than when they were self-sufficient and France more radios than before product .
Thus, total production is now 83 and bread 13 radios See table below.
Now compare the total production with a specialization with a total production before keeping in mind the assumptions behind the production possibilities model These assumptions include fixed resources, the amount of resources does not change, but what happens to the quantity produced the increase in amount of 11 bread and 83-72 13-12 1 radio so the same amount of resources that we now produce 11 more bread and more radio 1 This reduces the shortage.
But are the United States and France now better than before t say yet, but let's assume they decide to trade the United States produces a lot of bread and some radios and France has many radios and few bread while the United States can offer to trade 1 bread in France for all radios - and France will likely decline the offer France can then offer to trade one radio for all the bread product in the United States - and States States will most likely refuse.
If they continue to negotiate, they can find a job that is beneficial for each country Let's say they decide to trade bread 12 to 6 stations.

The United States produces 80 Bread 5 radios see below and trade 12 bread in France for 6 radios remaining 68 bread from 80 to 12 and 11 5 6 radios.
France, which produces 8 radios and 3 shops bread 6 radio stations in the United States in exchange for 12 bread They end with 2 radios 8-6 15 3 12 bread.
If we plot these quantities on the possibilities of graphics production of each country, see above, we see that they are outside production possibility curves of each country In a previous lesson, we said that these quantities are impossible - but we should have been impossible without trade two countries consume more with trade they could not trade This reduces the shortage.
Specialization based on the results of comparative advantage in a more efficient allocation of world resources, and large McConnell and Brue 1993 outputs.
We assume that there are constant costs in the production process that gives us a straight PPC and makes it easier to calculate the opportunity costs and find that comparative advantage but in a lesson previous, we have learned about the law of increasing costs What would happen to our analysis if we used a more realistic concave PPC.
The result would be that trade is always beneficial for both countries, but there would not be 100 specialization This is because the production of a product increases so does the opportunity costs of production of this product and country will not maintain its comparative advantage Remember that comparative advantage is the ability to produce a lower opportunity cost, so that costs increase with the production, comparative advantage is lost.

In the example above, we said that after negotiations the United States and France agreed to swap 12 bread for 6 radios is called the terms of trade - the price of the products involved in the trade International in real terms rather than in terms of money.
How did I know that if I used these terms of trade that both countries benefit from trade.
It is possible to calculate the minimum and maximum terms of trade We begin by considering the opportunity costs.
We know that since the United States has a comparative advantage in the production of bread, they specialize in bread, produce more, and trade, France What is the minimum amount that the United States accept for 1 loaf good, the United States itself it costs 1 4 wireless to produce each bread so that they will accept nothing less that France buys bread United States costs France 2 to produce 1 to 3 radios bread so that they will not pay the United States more than that.
The minimum the United States will accept for bread 1 4 wireless and the maximum that France will pay for 1 bread is March 2 radio said that the minimum and maximum terms of trade for 1 bread that is acceptable to both countries is 1 4 2 3 radios.
The terms of trade was 12 bread for 6 radios see above bread or 1 for each 1 2 wireless is between the minimum and maximum terms of trade 1 2 is between 1 and 4 2 3.

We can do the same for France sells radio stations in the United States costs France 1 1 and 2 of bread to produce 1 radio that they will accept nothing less than that, the United States buys the radios cost US 4 bread to produce 1 radio itself, so they pay France anything over 4 bread for 1 radio therefore, the minimum and maximum terms of trade for 1 radio 1 and 2 January 4 bread.
The terms of trade was 12 bread for 6 radios see above 1 or 2 radio for bread that is between the minimum and maximum terms of trade is between 1 2 and 1 2 and 4.
Above, we studied the economic basis of specialization and exchange - or trade trade people because they take advantage of trade Remember free trade is not forced trade, we have not to trade with everyone if we want to We learned that occurs specialization and exchange due to the principle of comparative advantage and we used this principle and production possibilities curves to show how both parties benefit from trade Everything discussed in this lesson applies to trade between me and Wal-Mart, between Illinois and Alabama, or between the United States and other countries If you go to a store to buy something rather than producing it yourself, you support trade.
we will focus here on International Trade The reason we trade with other countries is the same reason we trade with other states, counties, cities, or to each other - earn two sides.
Although the fundamentals that support trade apply to both trade between Illinois and Alabama and trade between the United States and other countries, there are some differences.
1 distance differences mobility tends to make the more expensive international trade and therefore less likely that domestic trade but modern transportation has significantly reduced costs.

2 Exchange differences when we buy something from Alabama we pay with US dollars, but when you buy something from Japan, they want to be paid with Japan Yen There is a cost and risk sharing currency, making it the most expensive trade that internal trade in Europe, they decided to use the same currency to the euro to avoid the costs in developed economies, however, with well-functioning foreign exchange market this n is not a major barrier to trade, but it may be in some developing countries.
3 This policy is the main difference between the domestic trade and international trade The US Constitution prohibits restrictions on trade between States Therefore, we in Illinois can t tax the Wisconsin cheese to help dairy farmers Illinois but we can cheese import tax from other countries is a reason why we have political disagreements on trade with Mexico, but not trade with Montana.
INTRODUCTION From which countries the United States buy the most and which countries we sell the most are the most important trading partners of the United States before attempting to guess which Please scroll down China Japan Germany.
We buy more Canada See Chapter 5 for more facts about the US and global trade.

As you study this section of Chapter 5 keep in mind the following questions.
International comparisons Exports as a percentage of GDP.
A volume 1 1 Table 5 gives an indication of the importance of world trade in several countries according to their exports relative to total production.
2 Figure 5. 2 shows the growth of imports and U of exports over the past decades Currently, exports and imports are 11 percent and 16 percent of GDP, which is more than double their significance ago twenty five years.
3 The United States is the world's largest trading nation measured by total trade, but not compared to its GDP, the share of the US in world trade declined by a post-World War level of a third of total trade to an eighth today.

1 U S depends on imports for bananas, coffee, tea, spices, foodstuffs; raw silk, diamonds, natural rubber, a lot of oil.
2 On the export side, agriculture relies on foreign markets for a quarter to a half of sales; chemicals, airplanes, automobiles, machine tools, coal and IT industries also sell significant portions production on international markets see Table 2 May.
The U S has a trade deficit in goods exports exceed imports; In 2005, the deficit of trade in goods was 782 billion.
The U S has a trade surplus in services 58 billion in 2005.
The main exports of the U S include computers, chemicals, semiconductors, consumer durables and agricultural products The main imports are oil, automobiles, computers and metals.
U S exports a lot of the same products, it is important intra-industry trade Specifically, automobiles, computers, chemicals and semiconductors See Table 2 May.

Just over half of the U S trade with the industrially advanced countries See Table 5 March.
Canada is the United States quantitatively the most important 24 U export trading partner; 17 of U. imports
The US has huge trade deficits with Japan and China in 2005, the trade deficit with Japan US was 85 billion trade deficit with China is now larger than Japan, to 202 billion in 2005. See table May 3.
the foreign oil dependency on U is reflected in its 94 billion trade deficit with OPEC countries in 2005 In 2005, imported 125 billion US petroleum products mainly OPEC countries during the export of 31 billion those countries.

The U S led the world in the volume of exports and imports, Germany is the largest exporter in the world; U commodity exports represent about 9 world exports.
U of goods and services exports on the basis of national income accounts include 11 of the total output U.
Although the United States to Japan and trade dominate the global Western Europe, there are emerging worldwide that collectively generate significant international trade such as South Korea, Taiwan, Singapore and China China exported about 762 billion in 2005, making it a major player in international exchange.
international trade financing and savings bond of economic change in one part of the world has implications for countries around the world.
International trade and finance is often at the center of economic policy U
D financial ties International trade involves complex financial links between nations trade deficits must be financed by loans or foreign exchange earnings, which is accomplished by selling US assets by foreign investment in U SU S borrows citizens of other nations; U S is the largest debtor nation in the world.

E Facilitating the factors behind the growth of trade.
1 The transport technology has improved over the years.
2 Communications technology enables operators to do business in trade and global finance very easily.
3 Trade barriers have fallen dramatically since 1940, and the trend continues to free trade.
Global Perspectives 5 1 1 shows the main players in world trade.

2 New participants have become important, especially China Asian countries, which now includes Hong Kong, Singapore, South Korea and Taiwan The collapse of communism led to the emergence of former Soviet republics and countries East as participants in world trade.
Top trading partners - Total Trade, exports, imports.
THIS QUESTION IS ON THE DISCUSSION PANEL.
the United States should use trade restrictions to protect American jobs.

CNN - As new report from the Labor Department showed the unemployment rate in the US outbreak in August to April 4 9 percent 6 percent, a new version, the study funded by the federal reveals that a significant number production jobs are changing the American working Friday in China.
Statistics from the Labor Department show that the U S employers cut far more jobs in August than private economists had expected - 113,000 nonfarm jobs, which is after the American layoffs has surpassed 1 million in July.
But regarding Stephanie Luce, PhD about his research data is not only a figure of at least 34,900 jobs - and perhaps twice - move States to China in a period result of seven months as warming Washington-Beijing trade relations.
What makes things worse, she said, is that some of them are better paid jobs, the type of jobs that US cities are fighting to win and now they're leaving many of these jobs are held by people who work for them for many years, and in some cases their entire lifetimes.

the United States should use trade restrictions to protect American jobs What is your answer to this question YES NO.
How would most economists answer this question YES NO.
According to economic studies of the following is true for countries that restrict trade.
The benefits of trade restrictions are much greater than their costs ith countries benefit from trade.
The costs of trade restrictions are much more important than the benefits ith LOSE countries when negotiating with other countries.

If you answered no to the first question, how do you reconcile your response to the news article above, or what could be done instead of trade restrictions.
Although there are significant advantages in efficiency to free trade, as we have discussed, many people support restrictions or trade barriers Here we will discuss the types of trade barriers, look at costs and benefits, and analyze why they exist.
There are five ways that countries can restrict or distort trade.
Rates are taxes imposed on imported products There are two types of rates - or two reasons that countries additional taxes on imported products 1 rates of income - are rights which are used to raise revenue for tariff government rates income tend to be low, so that consumers will still buy the product and therefore the government will collect revenue the tariff on imported cars is 2 5 what low rate always results in many import cars and the government perceives the additional income.
2 tariff protection - tariffs that protect domestic producers against foreign competition by high import prices protective tariffs tend to be higher objective of protective tariffs is to raise the price of the imported product so that people will not buy foreign imports and buy the locally produced product instead of the tariff on imported trucks is 25 some protective tariffs are as high as 100.
The import quotas of the maximum limits on the number or total value of specific imports Once the quotas are filled, imports are not allowed in the country of import quotas specify the maximum amounts of imports allowed in a time low import quotas may be more effective protective device that rates because the rates do not limit the amount of goods entering a country if an exporting country can produce a product at a very low cost, it could still be able to sell a lot, even if there is a price, but with an import quota it doesn t matter how cheap the product can be produced, once the quota is reached over the product can be imported .

There are several ways that governments restrict and distort global trade These NTBs include licensing requirements, unreasonable standards or red tape in customs procedures.
voluntary export restrictions are agreements by foreign companies to voluntarily limit their exports to Japan a country has voluntarily limited its auto exports to the US Why restrict the export Usually volunteers are adopted in response to strong threats trade restrictions, for example, in the 1980s the growing number of car imports from Japan led the Congress considering the imposition of tariffs or quotas on Japanese cars in response to these discussions, even if no new trade restrictions were adopted, Japanese car producers voluntarily reduced their exports to the US and this action persuaded Congress not to adopt new trade restrictions.
Export Subsidies occur when governments pay companies to export goods such subsidy reduces the price of exports and the amount exported thus increasing the export subsidies are really a type of non-tariff barrier to trade, but I listed separately here because it is one that is often in the news these days they distort international trade, they are seen as an obstacle to free trade.
The United States, Europe and Japan have a lot of subsidies and price supports for agricultural products This encourages farmers in the rich countries to produce more as more is produced, world prices of these products reduces these low world prices have a very detrimental in poor developing countries that rely more on agriculture for their livelihood Thus, the result of rich countries trying to help their farmers is to hurt the poorest of the poor in the world over, countries rich tend to have high tariffs on imports of agricultural products from poor countries These three export subsidy policies, agricultural subsidies and agricultural import restrictions have very negative effects on poor farmers in countries world's poor.

Please listen to National Public Radio report following by clicking on the link below and click the button In this document you will learn about a proposal.
Reduce agricultural tariffs around the world to promote trade and efficiency.
Eliminate agricultural export subsidies in rich countries.
Reduce agricultural price supports that pay farmers in rich countries to produce more.

Global Trade Talks aim to reduce agricultural subsidies.
All Things Considered, November 22, 2002 in Doha, Qatar, the World Trade Organization negotiations focus on significantly reducing or eliminating agricultural subsidies subsidies Some analysts say it is difficult for developing countries to participate in growth and export crops NPR Reports Kathleen Schalch.
Read also the BBC following report on how subsidies to cotton producers in the United States affect poor farmers around the world The World Trade Organization ruled that the US subsidies constitute unfair trade practices and they asked the US to remove.
Why Trade Barriers Exist - special effects of interest.

We now know that specialization according to the results of comparative advantage in a more efficient allocation of world resources, and most important releases If this is true, why countries may restrict trade provincial and territorial governments understand the benefits of free to understand why exchange trade barriers exist will use the example of import quotas on steel and answer the following three questions: a winning trade barriers that makes a profit of imported steel quotas in the uS b loses trade barriers c why are trade barriers look good.
Who wins trade barriers that would support restrictions on steel imports to the US cheaper in other countries.
Who loses trade barriers that hurt these restrictions on imports of steel.
US companies that use steel as import quotas on steel prices will increase - as automobile producers in the United States.
The factory workers who need to use steel - like auto workers in the United States.

Above all, American consumers lose because of rising steel prices and less steel, higher car prices and fewer cars, i e LESS EFFICIENCY PRODUCTS Fewer, PRICE AND MORE.
Why trade barriers look good Why governments enact trade barriers.
They do not understand the benefits of international trade and only see the damage in some industries that can t compete with imports Remember, the benefits of free trade far outweigh the costs of political considerations are important because Don t consumers see the effects of a tariff or quota directly, but they see the impact of import competition on some further workers, the benefits of free trade tend to be distributed among all consumers, but the benefits protection policy are made almost immediately in the short term by the industry concerned can have a significant and vocal participation in the result.
Therefore, governments enact trade barriers, even if they hurt their consumers who must pay higher world prices trade barriers by tariffs and protective quotas showed costs to society as the benefits received by protected companies and workers.
Read the following article, especially the yellow highlighted paragraphs that describe the impact of special interest The effect of special interest says that for some people benefit a lot of trade restrictions such as US steel companies and their workers, they have a particular interest in support of restrictions on steel imports the rest of use are not only bad some of these trade restrictions, therefore, we do not oppose enormously, although there are many more of us, and our total losses are much greater than the gains of the steel industry see table below, the steel industry is more difficult to pressure these trade restrictions and we very little lobby against them.
Consumers don t see the negative effects of a tariff or a quota directly, but they see the impact of import competition on some workers.

In addition, the benefits of free trade tend to be distributed among all consumers, but the benefits of a protection policy are made almost immediately in the short term by the industry concerned can have a significant and vocal participation in profit .
The costs of trade barriers are much higher than the benefits.
The costs of trade barriers in society are much higher than the benefits of trade barriers to the company's economists have estimated the benefits and costs and have expressed in dollars since the main argument of trade restrictions is to create jobs, we will discuss the fallacy of this argument below, economists calculate the total cost to society per job SAVED results can be seen in the table below.
The net costs of trade protection in 8 industries.
McConnell and Brue, 2002 Source compiled from the Commission of international trade data from the United States published in December 1995 data are for 1993.
As you can see, the annual cost to society per job saved is very high - even higher than the salary for jobs in other words, we would be better to have free trade and pay only those former workers for doing nothing but of course, we wouldn t want to do, but we'll still get far if we go to trade liberalization and help people who lose their jobs to adapt more efficient economy is the important point.

The gains that create trade barriers for protected industries at the expense of much higher losses for the economy as a whole the result is economic productive inefficiency McConnell and Brue, 2005, p 368.
Our manual covers the changes that occur in the dynamic trade, free, savings and what can be done to help workers who are negatively affected by free trade The point is that the company would be better off with free trade and help these people adapt, if we try to restrict trade and prevent changes.
Trade Adjustment Assistance A change of comparative advantage A nation over time, the development of products that are produced in declining industries workers are often hurt by this process.
B Trade Adjustment Assistance of the 2002 law was passed to mitigate the difficulties caused by the changing trade patterns The law provides.
1 The cash assistance beyond unemployment insurance to 78 weeks for workers displaced by plant imports or reassignments to receive the aid workers must actively participate in job search or retraining .

2 Funds for geographically relocate to new employment elsewhere in the U S.
3 refundable tax credits for health insurance to maintain coverage during the period of unemployment.
4 insurance wage for workers aged 50 or over who fills wage gap between their old and new jobs.
Supporters like C that target workers affected by foreign trade and still allows the reduction of trade barriers.

D Critics observe that only 3 of job loss was due to foreign trade, many jobs are lost because of a dynamic economy the same reason foreign trade patterns change, and the loss of a foreign trade work does not deserve preferential treatment.
Trade barriers have a negative impact on income distribution i e they hurt the poor more than the rich.
We have discussed above, and we will discuss below how to trade restrictions tend to hurt people in the poorest countries of the world more than those in richer countries but even in the richest countries of the world trade restrictions tend to harm the poor more than the rich Skim the following report makes this fact, the report linked below tends to exaggerate the point slightly by selecting specific and spectacular examples of what you need to remember is tariffs and quotas on low-income families proportionately more than families in higher income restrictions T are very regressive Rade McConnell and Brue, 2005, p 369.
Trade restrictions in the most developed countries have a negative impact on the populations of the least developed countries.
We will study the least developed countries of the world in the next unit Here, we want to understand how trade restrictions can have a greater negative impact on the poorest countries.

Now that we know that the overall costs of trade restrictions far outweigh the benefits, we should ask, Why is it that we have the special interest effect discussed above partially answers that question here examine the arguments used by those who support the trade barriers for each argument make sure you understand the argument 1, 2 whether the argument is economically viable or not, and 3 if it is economically sound, whether there are problems further with the argument.
There are six commonly used arguments for trade restrictions that we will discuss briefly.
A Self-sufficiency b c Diversification infant industry Military Strategic Trade Policy of protection against dumping e Create or protect jobs f Cheap foreign labor.
The argument is an argument that the country can not depend on other countries for its national defense Therefore, we may want to protect certain industries so they don t go out of business because of the international military competition can sufficiency be a valid political economic argument to protect industries essential to national defense.
However, the problem with this reasoning is that almost all sectors is critical in one way or another, it is difficult to select strategic industries to protect Moreover, most goods are produced in many places, so dependence on a nation is unlikely.

1 It is difficult to measure the benefits of these trade restrictions 2 Very many industries are trying to make this request 3 Are there better ways to ensure that we do not become dependent on other countries for defense grants to certain industries could help these industries remain in business with fewer negative effects on society.
An argument 1 protect certain industries to diversify the economy 2 less reliance on one or two products.
Diversification of stability can be a legitimate reason for a nation to protect certain industries until they become viable, for example, Saudi Arabia can not always be able to depend on oil exports or Cuba sugar exports they need to develop other industries.
1 This argument does not concern the U S and other diversified economies 2 Inefficient economic costs of diversification can be great and not worth protecting.
An argument The argument of the nascent industry is similar to the diversification argument for protecting new industries may have need of temporary protection to gain productive efficiency.

1 2 temporary protection while new industries are established 3 protection is then removed.
1 which industries should be protected and how we know they will be able to compete once the protection is removed These questions will have to answer by the government which has no expertise in these areas.
2 Often, she would not be temporary Once the industry is established trade restrictions are expected to be eliminated and the result is more competition which is good for society, but often gain political influence and industry is pressure to maintain trade restrictions.
3 Is it necessary Many industries up without government aid it is not known why some industries need this help.

strategic trade policy was successful in Japan and South Korea, but there is still a danger of retaliation by the concerned nations affected countries can implement tariffs in response.
February 1 industrialized countries promote the development of products 3 examples Japan; South Korea 4 reprisals problems.
Protection against dumping argument is another argument in favor of rates when countries dump surplus products on the U S market at prices below cost These companies may try to hunt competition U S.
1 defining the lower dumping costs 2 driving competitors arguments monopolization 3 makes some economic sense, but.
The federal government has the right to impose anti-dumping tariffs duties on goods that have been undervalued, but it can be difficult to prove the sales price below first Dumping is an unfair trade practice and is prohibited under the law of trade U S.
1 small number of cases 2 price discrimination are not dumping - Dumping can be a form of price dumping or comparative advantage 3 discrimination.

An increase in domestic employment argument is the most popular argument for protection, but there are significant deficiencies associated with this reasoning.
1 job creation as imports - Imports may eliminate some jobs, but create others in the sales and service industries for such products.
2 reprisals - Retaliation is a risk that occurred in the 1930s when high tariffs were imposed by the U S Smoot Hawley Tariff Act of 1930 Protectionism against US products will harm our export industries such trade wars erupt even today, although the WTO helps to eliminate the problem.
3 Long-term ratings - long-term assessments are linked to the fact that the continuing surplus of exports over imports led to a shortage of dollars abroad, foreigners need to buy more US goods and services; a nation must import to export.

4 needs to import to export - the fallacy of composition applies here imports of a nation are the exports of another by making short-term employment goals at home, the trading partner may be weaker and less able to buy the products of the protectionist nation.
C. The argument increase domestic employment does not make economic sense - jobs are changing, but not increased.
Recently outsourcing of jobs has become a problem in the popular press Offshoring is moving the work previously done by American workers to workers located in other countries Offshoring took place a long time, usually in the manufacturing sector in recent years however, the advances in computer and communication technology enabled service jobs to move Offshoring sea reflects changes in comparative advantage, and creates the same problems of job loss and the benefits of production costs and commodity prices that other changes in trade patterns.
U S develops and maintains or comparative advantage in other sectors; while offshoring causes some loss of jobs, it also creates demand for additional jobs While parts of offshoring an operation entails costs for workers who lose their jobs, it is best of all now moving abroad.
An argument is said protection needed against foreign labor competition cheap However, this argument does not hold.

It is mutually beneficial for the rich and the poor to trade them.
C good foreign labor market argument does not make economic sense - but it is very popular.
In no negotiation, we do t raise our standard of living at all, but we will reduce them by moving labor in inefficient areas where foreign labor could have produced the elements more effectively.
The arguments that make some sense, but often abused military self-sufficiency b c Diversification of infant industry protection against dumping.
The arguments do not make sense, but are very popular.
An increase in domestic employment b cheap foreign labor.

Trade barriers may cause a trade war, when all nations retaliated with trade barriers of their own The Smoot-Hawley Act of 1930 is a classic example of this, he urged other countries to raise tariffs and world trade fell and US production See Figure 5.. 5
1 Trade Reciprocity Act 1934 aimed to reduce tariffs.
1 He gave the president the power to negotiate discounts up to 50 percent if the business partner has also reduced its rates.
2 It included clauses of the most favored nation in agreements that other countries also benefit when the negotiations were successful with a particular country, for example, the US has negotiated reduced rates with France to lower US tariffs on French imports, imports from other countries with the status of the most favored nation, for example, Sweden would also be reduced.

2 The General Agreement on Tariffs and Trade GATT.
1 In 1947, after World War II, the U S have signed an agreement to negotiate reductions on a multilateral basis Twenty-three nations signed originally, but now 128 nations belong to the GATT.
2 The last round of GATT negotiations was the eighth round of negotiations began in Uruguay in 1986 and concluded at the end of 1993. The agreement was adopted by Congress in the fall of 1994 came into force in 1995, and was introduced gradually until 2005 its main provisions are as follows.
B services are included in the trade rules of the Treaty.
C quotas on textiles and clothing imports will be replaced by tariffs, and these, too, will be phased out.
D agriculture will also be affected with members agreeing to reduce agricultural subsidies and quotas on agricultural imports.

E intellectual property will be protected by an international patent, trademark and copyright agreements.
Inefficiencies protectionism led nations to seek ways to promote free trade Uruguay Round of 1993 established the World Trade Organization in 2006, the WTO had 149 member countries of the GATT Uruguay Round established the WTO as successor of GATT.
The ninth and final round of Doha Round negotiations began in Doha, Qatar, at the end of 2001 This series has targeted further tariff reductions and quotas, as well as the reduction of agricultural subsidies that distort trade patterns There was named for where the original round, Doha, Qatar.
The WTO oversees trade agreements and rules on trade disputes.
WTO Critics fear that the rules designed to expand trade and investment allows companies to circumvent national laws that protect workers and the environment The WTO has become a target of protest groups that are against various aspects of globalization.

Supporters argue the promotion of free trade will increase production and incomes and living standards will probably cause more protection for workers and the environment.
1 In many parts of the world, countries have formed free trade areas to reduce tariffs.
2 The EU, formed in 1958 as the Common Market now consists of 25 European countries, with the last 10 joined in 2004.
3 The EU is a trade bloc, with members having a common identity, economic interests and trade rules.
1 The euro is a currency issued by the EU, which is now used by twelve of the twenty-five EU countries from 2006.

2 From 1999, the euro has been used as an electronic payment for purchases by credit card and transfer of funds between banks.
3 In July 2002, the euro is accepted for payments in the EU countries that have adopted the currency.
1 This free trade area was established in 1993 between Canada, Mexico and U S with about the same production that combined the EU, but a larger geographical area.
2 Free trade with Mexico was controversial because critics fear a loss of American jobs that companies can move more easily in Mexico Moreover, they fear the Japanese and South Korean companies to build factories there and goods in duty free import to U S.
3 The increase in trade has increased domestic employment, reduce unemployment and increase the standard of living in the three countries.
A trade deficit occurs when the value of imported goods exceeds the value of exported goods.

A In 2005, the US trade deficit in goods and services was 724 billion, and the deficit of trade in goods was 782 billion Figure March 19 A trade deficit means that the US receives more goods and services imports from abroad that sends exports.
1 From 1997 to 2000, from 2003 to 2005, the US economy has grown faster than the economies of many major trading countries Revenue growth boosted US purchases of foreign products In contrast, Japan, some European nations, Canada suffered recessions or weak income growth during this period.
When our economy makes people buy more things, including things when imported from other countries economies are in recession citizens buy fewer things reduced the number of products exported from the United States.
2 large trade deficits with China have emerged to 202 billion in 2005, more than 83 billion U S deficit with Japan.

3 oil prices rapidly, due to the high percentage of oil imported by the U S have increased the trade deficit with OPEC.
4 A savings rate declines in the U S has helped U S trade deficits and increased foreign investment in U S As Americans save less, they spend more, including more on imports.
1 CURRENT CONSUMPTION INCREASED A trade deficit means that the US receives more goods and services than foreign imports as exports it sends the gain of the current consumption increase in current consumption allows States United consume amounts outside of its production-possibility frontier can come at the expense of future consumption reduction Finally, with high trade deficits of the dollar will decline and imports will become more expensive and begin to decline as the exports increase, which will reduce the trade deficit, but also reduce future consumption.
2 US DEBT INCREASED A trade deficit is considered unfavorable because it must be financed by borrowing from the rest of the world, sales of assets, or tap into the foreign reserves in 2004, foreigners owned 2 5 billion more assets in the United States than Americans owned in foreign assets.
3 Therefore, the current consumption savings provided by U trade deficits could mean permanent debt, the permanent foreign ownership, or great future consumption sacrifices These sacrifices can be minimized if the results of the higher economic growth foreign investment expands our capital base.
A In exchange, various national currencies market is exchanged against another, so that international trade can take place Germans want euros, Mexicans want pesos and Japanese yen when they want to sell their products.

B rate of exchange of national bond, a price the country with all the foreign price to allow you to translate the price of foreign goods in dollars For example, if the yen dollar exchange rate is 1 percent per yen, a Sony TV priced at 20,000 US cost 200 20 000 x 01.
C. The yen foreign exchange market the dollar is represented in Figure 5 3 yen demand and supply curve of the yen will establish the price of the dollar balance of the yen.
1 If the demand for yen rises, the price of the dollar rising yen This means that the dollar depreciates against the yen This could occur for many reasons, including an increase in US income that allows Americans to buy more Japanese products, or an increase in the preference for Japanese products the result is that Japanese goods become more expensive for Americans and uS goods would become cheaper us to see Figure 4 May.
2 If the opposite happened and income that Japan has increased more than the US or Japanese income and preference for US products rose, the dollar would appreciate against the yen as the offer of the yen has risen Americans buy a greater amount of Japanese products because they have become cheaper in dollars.

• When the French cars have dominated the world - When the world dominated French Cars



Export cars_1 French, export French, they produce bread, they produce radio.