English Unlimited HAK/HUM 4/5, Schulbuch mit Audio-CD und CD-ROM (mit Handelskorrespondenz)

118 Trading with the world 10 LANGUAGE SKILLS EXPLORE EXTRAS In pairs, discuss what international trade is and try to imagine what your life would be like without it. Which goods would you have to do without? What effects would it have on our economy? Read the information below and answer the questions. 1 What different ways are there to restrict imports? 2 How does international trade affect developing countries? 3 How has world trade changed in the last two decades? 4 What is the role of the WTO? 5 Which trading blocs and trade agreements are mentioned? What is their function? a REAdINg 6 b Changes in international trade International trade The volume of world trade has grown hugely since the triumph of neoliberalism, the fall of communism and the founding of the WTO, all of which happened in the 1990s. Despite these changes, there are still trade restrictions like tariffs and non-tariff barriers in place. Tariffs (money charged on imported goods) are imposed for various reasons. They are designed • to generate revenue for the importing country. • to counteract export subsidies given to the exporters by their home countries. • to protect small industries in the importing country unable to compete against cheap imports. There are various other ways to restrict imports (non-tariff barriers). For example • imposing technical standards or health and safety standards , often used to block food imports from developing countries. • labelling requirements as in the case of genetically modified food, which will automatically lead to a reduction in sales. • administrative policies (‘red tape’) refer to difficult bureaucratic procedures to discourage imports. World trade and developing countries It is not uncommon for developed countries to offer preferential treatment in the form of tariff reductions ( preferential tariffs ) to developing countries in order to support their economic growth. One example is the agreement between the EU and ACP countries (African, Caribbean and Pacific Groups of States) called Everything but arms , which forbids the imposition of tariffs or quotas on all imports to the EU from those countries except for weapons. In addition, initiatives in developed countries like the Fairtrade label aim at helping producers and manufacturers in developing countries to obtain fairer prices for their products, to work sustainably and to achieve higher social and economic standards. Furthermore developing countries have increasingly become more interesting for foreign direct investment (FDI) . Companies from developed countries often invest in developing countries in order to be able to produce their goods more cheaply or to take advantage of a less regulated business environment and lower corporate taxes . Effects of globalisation In the last 20 years the share of the GDP that consists of imports and exports has grown significantly in most developed countries, which leads to their economies being connected more than ever. On the one hand, free trade has numerous advantages, like cheap goods and a wider range of goods for customers as well as the opportunity to cut costs for companies by relocating their production to countries with lower labour costs or by buying their raw materials in countries where they are cheaper. On the other hand, it leads to a loss of sovereignty and renders countries less able to survive on their own if war or other crises impede international trade. Institutions regulating world trade GATT (General Agreements on Tariffs and Trade) provides an institutional framework for negotiations between different countries about free trade. The so-called Uruguay Round led to the founding of the Nur zu Prüfzwecken – Eigentum des Verl gs öbv