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Foreign Trade

U.S. Trading with other Countries

+International Trade

It is the exchange of materials between countries

The U.S. trades to other countries and we let other countries sell products to American consumers

The U.S. tried to keep a favorable balance of trade, which means more sold to other countries than what is brought in from other countries

Is this true of the United States?? ?Do we sell more than we bring in??

+Trade Surplus vs. Trade Deficit

More exports than imports

Economic activity in the U.S. increases

New jobs are created as businesses grow to meet consumer demands

Amount exported is less than the amount imported

Jobs are lost as economic activity slows down

During the 1990s we were buying more foreign goods than people in other countries were buying American goods

This continues today because we import more goods than we export

+Trade Sanctions vs. Trade Embargos

Limits the amount of goods a country may send into the United States

Sanctions are used for many reasons

Punishment for actions against another country

Countries that violate human rights

An embargo stops trade with a country

The U.S. might impose an embargo for political reasons

The U.S. has had trade embargos on countries such as Cuba, Iraq, and North Korea

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Key Trade OrganizationsGATTWTONAFTAEU

+Key Trade Organizations

International trade is increasing. The world’s economies are becoming more closely tied together. The idea of

capitalism and free trade is spreading world wide. Businesses have branches in many countries. This is

called globalization.

Trade agreements between countries are sometimes made to help increase free trade. There are groups of

countries that work together to reduce tariffs and quotas to help businesses in each country.

+What is GATT

GATT= General Agreement on Tariffs and Trade

Founded after WWII in 1947

Formed and led by the United States

Purpose: encourage world trade and postwar economic recovery

23 member countries

8 meetings held around the world

Made agreements to reduce tariffs on manufactured goods

+What is WTO?

WTO= World Trade Organization

Formed in 1995

Place where trade agreements can be made

Oversees international trade agreements and handles trade disagreements

Offers help to developing countries

About 150 member countries

+What is NAFTA?

NAFTA: North American Free Trade Agreement (NAFTA)

Formed in 1992, took effect in 1994

Canada, United States and Mexico

Agreement lowered tariffs in order to increase trade between the countries

Those in favor of NAFTA: thought it would create more jobs

Fears of NAFTA: companies will leave, go to Mexico, jobs leaving

+What is the EU?

EU= European Union

Idea began after WWII

Uniting European countries was the best way to have peace

Common market was created, trade barriers removed

Now has 25 countries

More than just an economic union Allows citizens of EU countries to travel across borders more easily A single form of money was introduced, the EURO (12 countries

use it)