FBM Chapter 12 - International Trade

The principle that countries should focus on producing goods and services where they have a comparative advantage, leading to higher overall output and economic well-being.

The ability of one country to produce a good or service at a lower cost than another country.

The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade. It was signed in 1947 and lasted until 1995, when it was replaced by the World Trade Organization (WTO). The goal of the agreement was to reduce tariffs and other trade barriers. The GATT was created in the aftermath of World War II to reduce the barriers to international trade and thereby increase global trade and economic activity.

The World Trade Organization (WTO) is an intergovernmental organization that regulates international trade and encourages the reduction of trade barriers.

The process of buying and selling goods and services between countries. It allows countries to specialize in producing goods and services where they have an advantage, increasing overall production and economic growth.

The process of using resources more efficiently by focusing on producing what a country is best at, leading to higher overall output and economic growth.

The belief that trade should be fair and equitable for all trading partners, with equal opportunities for all players in the market.

The conditions that influence a country's competitiveness in the global market, including factors like labor costs, technology, and infrastructure.

The impact of international trade on the U.S. pork industry is greater than it initially appears, despite the smaller quantity compared to grains.

The cost of shipping fresh meat internationally is high, especially for longer distances. This cost influences which parts are exported.

When a country like Japan increases its demand for pork, it can drive up prices in the U.S. market.

Short-term price increases in pork, driven by international demand, can be temporary.

The global market introduces uncertainty and price fluctuations for U.S. pork producers.

Producers need to be aware of the impact international trade has on domestic pork prices when making their long-term plans.

The movement of pork in international trade has a significant impact on price fluctuations in the U.S. market.

The U.S. pork industry faces price variability due to the influence of the international market.

The pattern of goods exchanged between countries, often influenced by factors like seasonality and production costs.

Government policies like tariffs, quotas, and subsidies can protect domestic industries from foreign competition, but also raise prices for consumers.

The seasonal variation in production of agricultural goods like fruits and vegetables, impacting international trade patterns.

A measure of a country's advantage in production costs compared to others; lower cost countries usually export more.

The economic interdependence of countries due to specialization and trade, where countries rely on each other for goods and services.

The use of tariffs, quotas, subsidies, and other measures to protect domestic industries from foreign competition.

Importing goods and services from other countries, satisfying domestic demand and diversifying the supply of goods.

The fear that a country may experience shortages of essential goods, particularly during times of conflict or crisis, leading to a preference for self-sufficiency over free trade.

The use of government subsidies to support certain industries, with the goal of maintaining domestic production and preventing price fluctuations.

The economic argument for protectionism, claiming that the failure of a major domestic industry could have widespread negative consequences, potentially impacting the entire economy.

The argument that protectionism can lead to job losses and economic stagnation in domestic industries, as they become less competitive and innovative without facing global competition.

An economic tool used to restrict imports, implemented by placing a tax on imported goods, raising their price and making domestic products more competitive.

A limit on the number of goods that can be imported into a country, often used to protect domestic businesses from foreign competition.

The economic argument that supporting certain key industries (like steel or auto production) is important for national security, even if it means higher costs for consumers.

These are barriers to trade that make it difficult for countries to participate in international trade, such as subsidies, quotas, tariffs, and non-price barriers like regulations and complex requirements.

This concept suggests that countries should focus on producing goods and services where they have a lower opportunity cost, leading to greater efficiency and economic benefits for all.

This principle dictates that trade should be fair and equitable for all participating countries, ensuring no unfair advantages or disadvantages.

These barriers are designed to protect domestic industries by making imported goods less competitive, often leading to higher prices for consumers.

Often, eliminating these barriers is only the first step towards achieving truly 'fair' trade, as additional measures may be necessary to ensure equality and fairness.

This refers to a set of rules and regulations that are consistently applied to all participating countries in the international marketplace, ensuring transparency and predictability.

These are government policies that aim to protect domestic industries by providing financial assistance, such as subsidies, grants, or tax breaks.

These are restrictions on the quantity of goods that can be imported from another country, often used to protect specific industries.

The early rounds of GATT (1947-51) largely focused on reducing tariffs on non-agricultural goods, neglecting agricultural products.

The 1955-56 Geneva round of GATT negotiations marked the first attempt to address barriers to trade for agricultural commodities.

Internal farm programs and policies within countries, like the U.S. and the EEC (European Economic Community), are increasingly recognized as major obstacles to fully realizing free trade in agricultural goods.

The complex system of dual pricing, variable levies, and export subsidies used by the EEC (European Economic Community) creates conflict with the U.S.'s approach to trade, hindering progress on agricultural trade liberalization.

The Uruguay Round of GATT, launched in 1986, is the most recent attempt to address barriers to agricultural trade. It emphasizes the significant role of domestic farm programs in international trade, highlighting the need for better coordination between countries to achieve freer trade.

The focus of early GATT rounds was on tariffs for non-agricultural products, neglecting agricultural commodities.

The U.S. and the EEC represent divergent approaches to agricultural trade, creating a significant obstacle to achieving full liberalization of agricultural trade.

The importance of domestic farm programs in shaping international trade, especially in agriculture, is becoming increasingly evident.