What is international trade

Vocabulary

embraces - охватывает

has been gaining increasing significance – приобретает всевозрастающее значение

flow of funds – приток капитала (денежных средств)

makes everyone better off– делает каждого состоятельным

interlinked global economy– взаимосвязанная мировая экономика

impose restrictions – вводить ограничения

customs duties – таможенные пошлины

specific tariffs - специфические тарифы (пошлины)

a tax per unit of the commodity – пошлина (налог) на единицу товара

ad valorem– пошлины “ад валорем”, т.е. с объявленной цены

regulations– нормы, инструкции

artificial– искусственный

retaliated– ответили тем же

The study of economics would be incomplete without an understanding of the nation’s role in the world economy. The study of the world economy is known as “international economics”. International economics embraces two broad areas of interest: international trade and international finance. World trade has been gaining increasing significance among nations. Why do nations trade? The answer is that nations have different quantities and qualities of economic resources and different ways of combining them. As a result, each country can produce certain goods more efficiently, or at relatively lower costs, than others.

When Honduras exports bananas to Switzerland, they can use the money they earn to import Swiss chocolate, or to pay for Kuwaiti oil, or a vacation in Hawaii. The basic idea of international trade is the use of foreign currencies to pay for the goods and services crossing international borders. Although global trade is often conducted in U.S. dollars, the trading itself involves various currencies. Japanese TV set is paid for in euros in Berlin or Rome, and German or Italian cars are paid for in U.S. dollars in Boston. Indian tea, Brazilian coffee, and American films are sold around the world in currencies as diverse as Turkish liras and Mexican pesos.

Whenever a country imports or exports goods and services, there is a resulting flow of funds: money returns to the exporting nation, and money flows out of the importing nation. Trade and investment is a two-way street, and with a minimum of trade barriers, international trade and investment usually makes everyone better off.

In an interlinked global economy, consumers are given the opportunity to buy the best products at the best prices. By opening up markets, a government allows its citizens to produce and export those things they are best at and to import the rest, choosing from whatever the world has to offer.

Despite the fact that trade is of great importance for each nation, all countries impose restrictions of one form or another to protect some of their domestic industries. The restrictions may be of several types: tariffs, import quotas, nontariff barriers. Tariffs are customs duties or taxes imposed by a government on the importation of a good. Tariffs may be specific, in the form of a tax per unit of the commodity, or ad valorem, based on the value of the commodity. Import quotas are laws that limit the number of units of a commodity that may be imported during a specified period. Nontariff barriers are any laws or regulations, other that tariffs, that nations impose in order to restrict imports. For instance, to “protect the health and safety” of their citizens, many countries establish higher standards of quality for various kinds of imported goods than for similar goods produced domestically.

Some trade barriers will always exist as long as any two countries have different sets of laws. However, when a country decides to protect its economy by erecting artificial trade barriers, the result is often damaging to everyone, including those people whose barriers were meant to protect.

WORD STUDY

Ex. 1. Match the words with their definitions.

_____ export _____ quality _____ quota _____ import _____ tariff _____ commodity _____ citizen _____ decline

a. an article of commerce b. a tax levied by a government on imports or occasionally exports for purposes of protection c. a native registered or naturalized member of a state, nation, or other political community d. a movement downward or towards something smaller e. goods or services sold to a foreign country or countries f. a prescribed number or quantity, as of items to be manufactured, imported, or exported g. degree or standard of excellence, especially a high standard h. goods or services that are bought from foreign

Ex.2. You can form the opposite of some adjectives by adding a prefix.

complete - incomplete

Choose un-, in-, or im- to form the opposites of the following adjectives.

possible - _____________________ important - _______________________

interested - ___________________ correct - _________________________

expensive - ___________________ successful ________________________

employed - ___________________ natural - __________________________

patient - ______________________ personal __________________________

Ex. 3. What are the opposites from the text of the following words?

1. The study of the national economy is known as “international economics”.

2. International economics embraces two narrow areas.

3. World trade has been gaining decreasing significance among nations.

4. International trade and investment usually makes everyone hard up.

5. By opening up markets, a government allows its citizens to produce and export those things

they are worst at.

6. Nontariff barriers are any laws or regulations that nations impose in order reduce imports.

7. ”To protect the health and safety” of their citizens, many countries establish lower standards

of quality for various kinds of imported goods.

8. When a country decides to protect its economy it erects natural trade barriers.

9. The Great Depression of the 1930, for example, spread around the world when the United

States decided to demolish trade barriers to protect local producers.

10. Whenever a country imports or exports goods and services, there is a resulting outflow of

funds.

Ex. 4. Fill in the gaps with a suitable preposition.

1. The study ____ economics would be incomplete _________ an understanding ____ the

nation’s role _____ the world economy.

2. _____ opening _____ markets, a government allows its citizens to produce and export those

things they are best _____.

3. When a country decides to protect its economy _____ erecting artificial trade barriers, the

result is often damaging _____ everyone.

4. __________ the fact that trade is _____ great importance _____ each nation, all countries

impose restrictions _____one form or another to protect some _____their domestic industries.

5. Indian tea, Brazilian coffee, and American films are sold _______ the world _____ currencies

as diverse as Turkish liras and Mexican pesos.

6. Tariffs are customs duties or taxes imposed _____ a government _____ the importation ____

a good.

7. Tariffs may be specific, ______ the form ______ a tax per unit _____ the commodity, or

ad valorem, based ______ the value _____ the commodity.

Ex. 5. Give sentences with the following phrases.

1. has been gaining increasing significance

2. flow of funds

3. to erect trade barriers

4. a two-way street

5. sets of laws

6. establish higher standards of quality

7. involves various currencies

8. interlinked global economy

9. to protect some of their domestic industries

10. spread around the world

COMPREHENSION

Ex. 6. Answer the questions.

1. What does “international economics”study?

2. Why do nations trade?

3. Does trading involve various currencies?

4. What does “flow of funds” mean?

5. How can international trade make everyone better off?

6. Why do all countries impose restrictions on the importation of goods and services?

7. What restrictions do the countries impose?

8. What is the difference between specific tariff and ad valorem?

9. What do some countries do in order to restrict import?

10. What happens when a country decides to protect its economy by erecting artificial trade

barriers?

QUESTIONS FOR DISCUSSION

1. What would happen to standards of living in your country if all foreign trade were prohibited?

How significant do you think this would be? In what areas would this impact be the strongest?

2. In order to restrict import many countries impose nontariff barriers. It encourages foreign

manufactures to produce high-quality goods in order to work up (завоевать) foreign markets.

It leads to the situation when high-quality imported goods are in more demand than the similar

goods produced domestically. Do you think it, in its turn, encourages domestic manufactures

to better the quality of domestic goods?

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