International Trade

1. Theories of international trade and international trade politicians
   2. Types of trade policy: protectionism and free trade.
   3. International trade and economic organizations. Role GATT and WTO in international trade liberalization
   4. Main trends in the development of international trade in modern conditions
   5. Trade as a tool of foreign policy. Trade sanctions

What should we know

WHAT IS INTERNATIONAL TRADE.
WHEN IT BEGINS.
• International trade is a form of exchange of labor products in the form of goods and services between sellers and buyers various countries.
• Export is the sale of goods to a foreign buyer with exporting it abroad.
• Import – purchasing goods from foreign sellers with their import from abroad.

Theories of international trade

MERCANTILISM
Representatives: Thomas Maine, Antoine de Montchretien, Jean-Baptiste Colbert. Origin: XIV-XVII centuries, in the era of the so-called “primary accumulation of capital" and "great geographical discoveries". Why do countries trade?: to increase wealth in the country (money: gold and silver). 
What should countries trade? 
goods purchased in other countries(intermediary trade), goods from national raw materials. Consequences of international trade: some countries get richer, others “waste” wealth (trade is a “zero-sum game” in which. One country's gain always means another country's loss). Trade policy: protectionism: creating barriers in international trade, protecting domestic producers from foreign competition, export promotion and import restrictions, input customs duties on foreign goods and receiving their own in return- gold and silver goods.

THE THEORY OF ABSOLUTE ADVANTAGE

Representatives: Adam Smith.
Origin: late 18th – early 19th centuries.
Why do countries trade?: to increase wealth in the country (number material goods).
What should countries trade?: goods for the production of which they have favorable natural conditions (special climatic conditions, availability of natural resources)
Consequences of international trade: all participants in trade
If they win, their wealth grows.
Trade policy: free trade

THEORY OF COMPARATIVE ADVANTAGE

• Representatives: David Ricardo
Origin: late 18th – early 19th centuries.
Why do countries trade?: to increase wealth in the country (number material goods).
What should countries trade?: goods in the production of which they has comparatively lower labor and capital costs - (the best technological conditions).
Consequences of international trade: all participants in trade benefit (both more developed and less developed countries) – their wealth.
Trade policy: free trade.

HECKSCHER-OHLIN THEORY

Representatives: Eli Heckscher, Bertel Ohlin
Origin: 30s of the twentieth century.
Why do countries trade?: to increase wealth
What should countries trade?: export such goods for production which use abundant factors of production, and import - those for the production of which there is a shortage factors of production. developed countries that have a lot of capital should trade with developing countries, where there is a lot of cheap labor, and not with each other friend.
Consequences of international trade: participating countries benefit from trade
Trade policy: it is beneficial to conclude free trade agreements only with those whose stock of factors of production is very different.

Types of Trade Policies

• Free trade – international politics state, which consists in non-intervention states into the economic field.
• Protectionism – international policy state, which consists in purposeful protecting the domestic market from income foreign-made goods.

Freedom of trade advantages
• stimulation of competition;
• producers are forced innovate, increase product quality and reduce it cost and price;
• expansion of offer goods, differentiation goods;
• more efficient placement resources in the global economy. flaws
• no protection national economy from competition from foreign business;
• domestic flood market for foreign goods;
• imposition on the consumer alien tastes

Protectionism advantages
• protection of national production from competition with foreign parties manufacturers;
• development of new production facilities;
• protection of young industries national economy;
• stimulates the growth of one's own production;
• balancing foreign trade balance. flaws
• weakening of competition in economics;
• incentives for improvement production;
• choice options are narrowed for consumers;
• deprivation of opportunity use of international division of labor;
• undermines opportunities for export of goods.

Instruments of state trade regulations

Duty (tariff) Trade quotas Subsidies Government procurement
This is the simplest way implementation trade politicians.
Is is a tax on imported product.
These are quotas which are installed by the state.
There are:
- imported
- export quotas.
It's financial assistance exporter or importer with sides states.
This is procurement which are being implemented state institutions, which directed exclusively on domestic goods.

International trade and economic organizations. The role of GATT and WTO in liberalization international trade

General Agreement on Tariffs and Trade (GATT) - international agreement concluded in 1947 to economic recovery after World War II, which for almost 50 years actually performed the functions international organization

Trade issues between developed and developing countries (North-South trade) To bridge the gap in levels of socio-economic development between developed and developing countries demand various concessions from developed countries, in particular, expanding access of their goods to the markets of developed countries, increasing the flow of knowledge and capital (especially in the form assistance), debt write-off, etc.

Other international trade organizations and regional trading blocs.

UN Conference on Trade and Development (UNCTAD)
The main objectives of UNCTAD are:
• promoting the development of international trade;
• equal, mutually beneficial cooperation between states;
• development of recommendations, principles, organizational and legal conditions and functioning mechanisms modern international economic relations;
• participation in coordinating the actions of other institutions UN economic development system economic relations and promotion of international trade.

INTERNATIONAL CUSTOMS ORGANIZATION (MTO)
International Customs Organization (ICO) – multilateral trade and economic organization, formerly operating under the name of the Customs Council cooperation (STS). Engaged in development and dissemination of uniform customs principles and rules with with the aim of accelerating global trade turnover and facilitating movement of goods

INTERNATIONAL CHAMBER OF COMMERCE (ICC)
The main activities of the ICC include:
• international arbitration (dispute resolution);
• development of recommendations in the field of international trade, financial services, e-business, information technology, energy and environment, intellectual property, marketing and advertising, taxation, investment policy, transport;
• combating fraud and other crimes in the field of business;
• coordination of inter-chamber cooperation in the world within the framework of special body - the World Federation of Chambers of Commerce.

Regional trade agreements are agreements concluded by two or more countries for the purpose of creating a zone free trade (FTA), customs union or deeper integration associations.
An FTA is a type of trade union for which a specific by a group of countries (two or more customs territories) achieved agreement to eliminate duties and other restrictions on trade for almost all trade between the territories of countries, members of such a union.

Globalization of international trade
• further liberalization of world trade and facilitation mutual access to markets

Modern development trends international trade.

• There is a predominant development of trade compared to sectors of material production and the entire world economy generally.
• The share of industry in the structure of international trade is growing.
• In the geographical direction of international trade flows
There is an increasing role of developed countries and China.
• The most important direction in the development of foreign trade is intra-company trade within TNCs.
• Trade in services is expanding.

Dynamics of international trade:
• High growth rates of international trade
• With the general growth of foreign trade, its dynamics in individual countries and regions vary
• Foreign trade is growing at a faster rate than overall rates of domestic economic development of countries
• Export and import quotas of many countries have increased

International trade growth rate
In 1950-2000 world trade turnover increased from 125 billion to 14 trillion dollars, more than 100 times.
The World Trade Organization (WTO) has brought together more than 150 countries, which account for 9/10 of world trade turnover.

International trade structure:
• The commodity structure of world trade is changing:
Ø the share of finished products in international trade is increasing;
Øthe volume of international trade in chemical products has increased;
Øthe share of international trade in commodities is declining, fuel and food
• Export and import of services plays an important role in world trade “invisible” exports (transport, tourism, banking and insurance companies, payments for patents, advertising revenues, training, healthcare). Decline in exports of some traditional services (transport).
• Trade between industrialized countries (USA, China, Japan, Germany) is growing at a rapid pace. Developing countries send about 70% of their goods exports to developed countries.