chapter 10 business in a global economy section 10.2 global competition
TRANSCRIPT
Chapter 10
Business in aGlobal Economy
Section 10.2
Global Competition
Read to Learn
Describe free trade.
Indicate who benefits and who does not benefit from free trade.
The Main Idea
Protectionism is the practice of putting limits on foreign trade to protect businesses at home. However, protectionism decreases competition and generally increases the prices that consumers pay for goods and services. More nations are moving toward free trade.
Key Term
protectionism
tariff
the practice of the government putting limits on foreign trade to protect businesses at home
a tax placed on imports to increase their price in the domestic market
Key Term
quota
embargo
a limit placed on the quantities of a product that can be imported
a ban on the import or export of a product
Key Term
freetrade
when there are few or no limits on trade between countries
Protectionism and Free Trade
Global competition often leads to trade disputes.
Protectionism and free trade are two opposing points of view involved in trade disputes.
Protectionism
Japan practices protectionism in the areas of rice farming and auto production.
protectionismthe practice of the government putting limits on foreign trade to protect businesses at home
Protectionism
Reasons to Restrict Trade
Foreign competition can lower the demand for products made at home.
Companies at home need to be protected from unfair competition.
Industries that make products related to national defense need to be protected.
Protectionism
Reasons to Restrict Trade
The use of cheap labor in other countries can lower wages or threaten jobs at home.
A country can become too dependent on another country for important products.
Other countries might not have the same environmental or human rights standards.
Protectionism
A tariff is an example of a trade barrier. tariff
a tax placed on imports to increase their price in the domestic market
Trade Sanctions
A government can impose a trade sanction, or penalty, on other countries, usually by adding tariffs.
Protectionism
A quota is another example of a trade barrier.
quotaa limit placed on the quantities of a product that can be imported
Protectionism
An embargo is a trade barrier that is usually used for political or military reasons.
embargoa ban on the import or export of a product
Free Trade
Supporters of free trade think all countries should be free to compete anywhere in the world without restrictions.
free tradewhen there are few or no limits on trade between countries
Free Trade
Benefits of Free Trade
Free trade opens up new markets in other countries.
Free trade creates new jobs.
Competition forces businesses to be more efficient and productive.
Free Trade
Benefits of Free Trade
Consumers have more choices in the variety, prices, and quality of products.
Free trade promotes cultural understanding and encourages countries to cooperate with each other.
Free trade helps countries raise their standard of living.
Free Trade
To reduce limits on trade, nations form trade alliances.
NAFTA (North American Free Trade Agreement) combined the economies of the United States, Canada, and Mexico.
Free Trade
Some people opposed NAFTA because they feared some workers would be displaced when trade barriers were lowered.
Graphic Organizer
North AmericanFree Trade Agreement
(NAFTA)
European Union(EU)
Association of Southeast Asian Nations (ASEAN)
United States, Canada, Mexico
Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, United Kingdom
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam
1. Give three reasons for protectionism.
protects businesses from unfair competition, from countries that violate U.S. human rights or environmental standards, and from overdependence on another country’s products
2. Give three reasons for free trade.
encourages competition, gives consumers more choices for products, promotes cultural understanding
3. What are some of the major trade alliances in the world today?
NAFTA, the EU, and ASEAN
Chapter 10
Business in aGlobal Economy
Section 10.2
Global Competition
End of