Basis of IB Anish Kumar

7/30/2019 Basis of IB Anish Kumar

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Presentation on

Basis for International Trademade by

Anish Kumar


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The basis for international trade is that a

nation can import a particular good or

service at a lower cost than if it were

produced domestically

In other words, if you can buy it cheaper than

you can make it you buy itThis maxim is true for individuals and nations

This is called specialization and exchange

The Basis for International Trade


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We have been a major exporter of wheat, corn, and

soybeans since colonial times

Initially, we had an abundance of land

Eventually we came to have a tremendous stock of farm

equipment We used to be a major exporter of steel and textiles

Now other nations produce these more cheaply

Examples


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The North American Free Trade

Association (NAFTA)

The European Union (EU)

The General Agreement on Trade and

Tariffs (GATT) The World Trade Organization (WTO)

World Trade Agreements andFree Trade Zones


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NAFTA was ratified by Congress in 1993

NAFTA created a free trade area thatincludes Canada, the United States, and

Mexico

Agreements on services, investment, intellectual

property rights, agriculture, and strengthening of

trades rules were included

There were also side agreements on labor

adjustment provisions, protection of environment,

and import surges

NAFTA


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This free trade association of 15

nations was formed in 1992 Freight was now able to move anywhere

within the EU without checkpoint delays

and paperwork

So-called quality codes were ended Workers from any EU country could work

in any other member country

The European Union


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GATT was drafted in 1947 and since been

signed by more than 146 nations The latest version was ratified by Congress in 1994

Reduces tariffs worldwide by an average of 40%

Lowers other barriers to trade such as quotas on

certain products Provides patent protection for American software,

pharmaceuticals, and other industries

The General Agreement on Tradeand

Tariffs (GATT)


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The WTO was set up in 1995 as a

successor to GATT

The WTO is based on three major

principles

Liberalization of trade Nondiscrimination

No unfair encouragement of exports

The World Trade Organization


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Under the most-favored-nation principle,

members of WTO must offer one member

the same trade concessions as any other

member.

This is a lot like when the teacher says that ifyou bring candy to class, you must bring

some for everyone

Nondiscrimination:The Most-Favored-Nation

Principle


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Thank you

Documents

Basis of IB Anish Kumar