Regulation of International Trade

Traditionally trade was regulated through 5) b_____ (двобічний) treaties between two nations. For centuries under the belief in Mercantilism most nations had high tariffs and many 6) r_____ (обмеження) on international trade. In the nineteenth century, especially in Britain, a belief in free trade became paramount and this view has dominated thinking among western 7) n_____ (країн) for most of the time since then. In the years since the Second World War 8) m_____ (багатосторонні) treaties like the 8) G_____ A_____ on T_____ and T_____ (Генеральна угода з митних тарифів та торгівлі ) and 9) W_____ T_____ O_____ (Cвітова торговельна організація) have attempted to create a globally regulated trade structure.

Risks in International Trade

The risks that exist in international trade can be divided into two major groups:

Economic risks

• Risk of 10) i_____ (неспроможність) of the buyer,

• Risk of protracted 11) d_____ (неплатіж) – the failure of the buyer to pay the amount due within six months after the due date, and

• Risk of 12) n__-a_____ (неприйняття)

• Surrendering economic sovereignty

Political risks

• Risk of 13) c_____ (скасування) or non-renewal of export or import licences

• War risks

• Risk of expropriation or confiscation of the importer's company

• Risk of the imposition of an 14) i_____ b_____ ban (заборона на імпорт) after the shipment of the goods

• Transfer risk – imposition of exchange controls by the importer's country or foreign currency 15) s_____ (дефіцит)

• Surrendering political sovereignty

Exercise 12. Fill in the gaps with the words in the box.

policy doctrines industries contents tariffs

consumers limits regulations customs subsidies

quotas barriers rates smugglers corruption

Protectionism is the economic 1)_policy_ of restraining trade between nations, through methods such as tariffs on imported goods, restrictive quotas, and a variety of other restrictive government 2)_____ designed to discourage imports, and to prevent foreign take-over of national companies. This is closely aligned with anti-globalization, and contrasts with free trade, where no artificial 3)_____ to entry are instituted.

The term is mostly used in the context of economics, where protectionism refers to policies or 4)_____ which "protect" businesses and "living wages" within a country by restricting or regulating trade between foreign nations:

1. 5)_____ – To protect existing businesses from risk associated with change, such as costs of labour, materials, etc.

2. Protectionist 6)_____ – To protect local producers and also raise revenue

3. 7)_____ – To prevent dumping of cheaper foreign goods that would overwhelm the market.

4. Intervention – The use of state power to bolster an economic entity.

5. Trade restriction

6. Exchange Rate

A trade restriction is an artificial restriction on the trade of goods between two countries.

An import quota is a type of protectionist trade restriction that sets physical 8)_____ on the quantity of a good that can be imported into a country in a given period of time. For example, a country might limit sugar imports to 50 tons per year. Quotas, like other trade restrictions, are used to benefit the producers of a good in a domestic economy at the expense of all 9)_____ of the good in that economy.

Critics say quotas often lead to 10)_____ (bribes to get a quota allocation), smuggling (circumventing a quota), and higher prices for consumers.

From an economics perspective, quotas are thought to be less economically efficient than tariffs which in turn are less economically efficient than free trade.

A tariff is a tax on goods upon importation. When a ship arrives in a port a 11)_____ officer inspects the 12)_____ and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid, it is the easiest tax to collect, and the cost of collection is small. Traders seeking to evade tariffs are known as 13)_____.

Tariffs may be of various kinds:

• An ad valorem tariff is a set percentage of the value of the good that is being imported.

• A specific tariff is a tariff of a specific amount of money that does not vary with the price of the good.

• A "revenue tariff" is a set of 14)_____ designed primarily to raise money for the government. A tariff on coffee imports, for example (imposed by countries where coffee cannot be grown) raises a steady flow of revenue.

• A "protective tariff" is intended to artificially inflate prices of imports and "protect" domestic 15)_____ from foreign competition (see also effective rate of protection). For example, a 50% tax on an imported machine raises the price from $100 to $150. Without a tariff, the local manufacturers could only charge $100 for the same machine; now they can charge $149 and make the sale.

• A "prohibitive tariff" is one so high that no one imports any of that item.

Contents

Introduction 4

Part 1

Unit 1. Economic Activity 8

Unit 2. The Science of Economics 12

Unit 3. Different Economic Systems 16

Unit 4. The Limits on Economic Freedom 20

Revision Units 1-4 24

Unit 5. Central Control of the Economy 29

Unit 6. Mixed Economies 35

Unit 7. Revision and Conclusion (Units 1-6) 41

Revision Units 1-7 45

Part 2

Unit 8. Utility and Prices 54

Unit 9. Supply and Demand 60

Unit 10. Some Economic Laws 65

Revision Units 8-11 69

Unit 11. Labour and Capital 76

Unit 12. Markets and Monopolies 82

Unit 13. The Open Market 88

Unit 14. Money and Banking 96

Revision Units 12-13 102

Revision Units 1-14 110

Part 3 Supplementary Texts

1. Markets 122

2. The Economy 126

3. National-Income Accounting 130

4. Measuring Economic Activity 138

5. Economic Fairness And The Distribution Of Economic Rewards 144

6. Public Goods, Information and Uncertainty 154

7. Inflation 160

8. The Global Economy and International Trade 167

Навчальне видання

АНГЛІЙСЬКА МОВА