International trade and access to markets

Question 1

Protectionism

Answer 1

Limiting trade by using tariffs and non-tariff barriers to shield a countries industry from foreign competition.

Question 2

Free trade

Answer 2

A policy of removing trade barriers

Question 3

The WTO

Answer 3

Set up to increase trade and resolve trade disputes.

Question 4

Rules set out by the WTO

Answer 4

Countries cant give another country special access to their market without doing so for all countries - except trade blocs
Countries should remove as many barriers as possible to promote free trade.
Countries should act predictably - not raising tariffs.
There should be fair competition.

Question 5

Trading blocs

Answer 5

Agreements between countries about trade, promoting and managing trade by removing barrier between their members.

Question 6

Characteristics of trade blocs

Answer 6

Trade within the member countries is the preference - rather than with non-member countries
It strives to reach common positions in negotiations with third countries of with other trade blocs.
It attempts to coordinate national economic policies to minimise disruption to intra-bloc economic transaction.

Question 7

Trade liberalisation

Answer 7

A goal of trade blocs with the aim of establishing a free trade area or common market e.g. members agree to reduce or eliminate trade barriers for all goods and services.

Question 8

NAFTA

Answer 8

The North American Free Trade Area
USA, Canada, Mexico
Regional
Its trade worth was $1.3 trillion in 2015
It has been beneficial to the average American citizen however a small number of workers in the US manufacturing industries have lost their jobs to Mexico.

Question 9

The EU

Answer 9

Regional trading bloc
Formed in 1958 and has 28 member countries
In 2016, Germany exports to other EU countries were £708 billion, compared to £501 billion to countries outside of the EU.

Question 10

EU aims

Answer 10

It focuses on creating an internal market, price stability, combatting discrimination, improve the quality of the environment and having scientific advancements.

Question 11

OPEC

Answer 11

The Oil and Petroleum Exporting Countries - based around the oil industry.
Intergovernmental organisation consisting of 12 of the main oil exploiting countries such as Saudi Arabia.
Home to 78% of the world’s oil reserves meaning it has significant power to affect oil prices.

Question 12

Aims of OPEC

Answer 12

Protect the interests of members nations, stabilise oil prices and ensure efficient, economic and a regular supply of oil.

Question 13

Special Economic Zones (SEZs)

Answer 13

They increase the volume of trade with emerging economies and less developed countries.
They have different trade and investment rules to the rest of the country, e.g. companies investing there may pay lower taxes on land and goods. They increase trade by keeping barriers in the rest of the country.

Question 14

ASEAN

Answer 14

The Association of South East Asian Nations
1967
10 member countries
The member countries are the main producer of manufactured goods so it aims to promote trade within them.

Question 15

Trade relationships - Developing countries

Answer 15

Most trade takes place between developing countries. In 2013, trade between the US and EU accounted for 30% of global trade. Most of these products require lots of money of expertise.

Question 16

HIC imports

Answer 16

From LICs they import goods such a food, tobacco and crude oil.
From NICs they import goods such a machinery and clothes.

Question 17

HIC exports

Answer 17

They import machinery and medicine to LICs and cars and chemicals to NICs.

Question 18

Trade relationships - Less developed countries

Answer 18

They trade with both emerging economies and developed ones. e.g. Bangladesh mainly exports to the US and EU and imports from China and India, rather than fellow less developed countries.

Question 19

Trade relationships - Emerging economies

Answer 19

China and India re becoming increasingly important to global trade. China = manufacturing, India = highly educated service sector.
Developing economies accounted for 34% of world exports in 1980, but 47% in 2011.

Question 20

LICS imports and exports

Answer 20

LICs export crude oil and minerals to NICs

LICs import manufactured goods from NICs.

Question 21

Social consequences of trade blocs

Answer 21

People are free to live in work in the country of their choice.
Living standards go up as trade prospers.
Relaxed borders mean it is easier for illegal immigrants to move around.
Legislation may limit workers instead of protecting them - some may want to work more hours than allowed.

Question 22

Economic advantages of trade blocs

Answer 22

They protect an area from economic competition
Lower prices mean trade is likely to increase
Economies of scale - countries can group together and benefit from mass production
Free access to markets means that countries can specialise.
Weaker sections of the industry are protected from cheaper imports from outside the trading bloc (e.g. EU shoe industry)
Weaker, disadvantaged peripheral regions can be supported by stronger areas.

Question 23

Economic disadvantages of trade blocs

Answer 23

Benefits of global free trade can be lost as countries concentrate trade within their trade bloc/area.
Inefficient producers can be protected for more efficient ones outside of the bloc e.g. inefficient European farmers can be protected by low cost imports from developing countries because of the advantages of the CAP system of support for them.
Non-member countries will be frozen out.
They are expensive - the EU will cost £960 billion between 2014 and 2020 - this money comes from taxing people.

Question 24

Increasing trade by creating jobs

Answer 24

In 2011, 3 million jobs were said to be directly related to the EU.

Question 25

Trade wars

Answer 25

Trade disputes caused by trade blocs. e.g. in March 2018, Donald Trump threatened to place a 25% tariff on steel imports for the EU due to there being a huge barrier on US companies doing business there.

Question 26

Access to markets

Answer 26

How easy it is for countries and companies to trade with each other. Developed countries are at an advantage.

Question 27

International access to markets

Answer 27

Determined by the extent of import and export barriers. It is easier for developed countries to access markets because they can pay high tariffs. They can also avoid high tariffs imposed by developing countries by opening factories within them.

Question 28

Trade blocs and access to markets

Answer 28

Trade blocs of developed countries have a lot of wealthy buyers and being a member of those trade blocs can increase access to trade.

Question 29

Access to markets - Loans

Answer 29

Developing countries rely on loans that depend on them removing trade barriers and increasing access to their trade markets.

Question 30

Special and differential agreements

Answer 30

This gives less developed countries a greater access to markets by letting them by pass tariffs. Profits allow LICs to diversify the range of industries they have e.g. by introducing manufacturing or tourist sectors.

Question 31

The EUs Everything But Arms Agreement

Answer 31

2001 | Allows the least developed countries to export some of their products to the EU without paying tariffs.

Question 32

Disadvantages of SDTs

Answer 32

They have a negative impact on developed countries, instead regional trade blocs, whereby less developed countries can negotiate prices collectively are more effective.

Question 33

Benefits of market access

Answer 33

Developed countries - more profit = higher wages Wide range of products available More interdependence

Question 34

Problems with market access

Answer 34

Trade benefits countries that are already developed more than developing ones. Countries are more interdependent so if someone goes wrong, more countries are affected. e.g. financial crisis 2008 increased unemployment rates in many countries.

Question 35

Economic disadvantages of differential access to markets

Answer 35

Its hard for countries with poor access to markets to establish new industries. They face high tariffs when trying to sell abroad, making their products uncompetitive. They may be undercut in their domestic markets by TNCs making cheaper and similar products. They become dependant on selling primary products which fluctuate in price.

Question 36

Gross National Income

Answer 36

Countries with poor access to markets have a low GNI so they have less money to invest into industry so economic development is slow.

Question 37

Economic advantages of access to trade

Answer 37

Countries with lots of access to trade can trade more so tend to see more economic growth. Citizens are wealthier, they can afford a larger range of products and they can develop high-tech industries which boost the economy further.

Question 38

Social advantages of access to trade

Answer 38

People in countries with better access tend to have higher paid jobs, more disposable income and a higher standard of living.

Question 39

Social disadvantages of access to trade

Answer 39

Quality of life is lower where countries have less market access because there is less money available from education and health care. In developed countries, better access to education means better access to jobs for women and ethnic minorities. Sweatshops