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17 Cards in this Set
- Front
- Back
7 reasons for restrictions on free trade |
-to protect infant industries -protect sunset industries -ensure employment protection -prevent dumping -correcting a current account deficit - restricting imports from countries with poor health/safety/environment regulations -strategic reasons -retaliation |
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Infant industries |
Industries in their early stages which may struggle competing internationally |
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Dumping |
Goods being exported to another country at below the average cost of production. Illegal under WTO but hard prove |
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What are tariffs and sketch the diagram |
Taxes on imported goods |
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Quota |
Physical limit on the number of goods that can be imported |
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5 restrictions on free trade |
-tariffs -quotas -subsidies to domestic producers -administrative barriers -exchange rate manipulation |
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Trading blocs |
A group of countries that trade freely but protect themselves from imports from non members |
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Free trade area |
An agreement between two or more countries to abolish tariffs on trade between themselves |
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Customs union |
Free trade area with a common external tariff |
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Common/single market |
Customs union with the free movement of factors of production and agreement on state aid and public sector policies |
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Monetary union |
Single market with shared monetary policy |
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5 benefits of trade agreements |
-improved comparative advantage -makes firms more efficient -fewer restrictions/ bigger market, increased EoS -trade creation -attraction of FDI |
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Trade creation |
Where economic intergration results in high cost domestic production being replaced by imports from a more efficient source within free trade area |
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Trade diversion |
When a common external tariff results in trade switching from a low cost supplier outside the trade area to a less efficient source within the area |
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6 things the impact of economic integration will depend upon |
-the extent to which it is deployed -relative efficiencies of countries inside and outside of the region - strength of comparative advantage -price elasiticities of demand and supply -how many goods are included in agreement -how non members react |
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WTO |
World Trade Organisation- international body whose purpose is to promote free trade by persuading countries to abolish tariffs |
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Three criticisms of WTO |
-slow to decide -disputes remain unsettled -accusations that the imposition of free trade makes countries more impoverished |