| First of all, speaking on this topic, I’d like to | | | | encouraging international trade, of making tariffs the |
| define what international trade is. Well, I feel it like an | | | | only form of protectionism, and reducing these as |
| exchange of goods and services, results of mental | | | | much as possible. It took nearly 50 years to arrive at |
| activity and labour force between different countries. | | | | the final GATT agreement because until the 1980s, |
| The aim of international trade is to use division of | | | | most developing countries opposed free trade. Also |
| labour more efficient with surplus. | | | | the regulation of international trade is realized by |
| Let me remind you, that international trade has a long | | | | some other W7orld International Trade Organizations, |
| history and a lot of different theories. If I am not | | | | such as the European Union, the North American Free |
| mistaken, first theories of IT appeared centuries ago | | | | Trade Agreement (NAFTA), signed in the early |
| and many of them are still in use. First and foremost, | | | | 1990s, and some others. |
| let me tell you about Economist Cannath Boulduin, | | | | So here we can speak about the interference in |
| that has used the term “cowboy capitalism” | | | | international trade. And there are 6 categories of |
| to describe the American economy of yesterday. He | | | | barriers in economics: |
| compared yesterday capitalism to the early American | | | | 1. Price based constrains. They are tariffs and |
| West. The land was so reach and the resource was | | | | subsidies. Tariffs are taxes charged on imports. |
| so wast that the people could abuse the | | | | Subsidies are offered to some domestic companies |
| environment with impunity. They could cut down | | | | for similar reasoning as tariffs. Domestic companies |
| trees, kill buggelo and plug the grass land. | | | | are aided directly through low cost loans and tax |
| But Boulduin’s “cowboy” is now gone. | | | | breaks. |
| The cowboy capitalism can’t operate | | | | 2. Quantity limits - quotas and embargo. Quotas are |
| successfully without the wast world unkept market. | | | | quantitative limits on the import of particular products |
| Another term to describe our world became popular | | | | or commodities. And embargo is a particular type of |
| in the 60’s. We are on “Space ship | | | | quota that sets the limit at zero imports often is |
| earth”, “Global village” according to | | | | placed on imports for clear political reasons. It's |
| Marshall McLuhan. That was him, who said that all | | | | prohibitional on trading within countries generally in |
| persons are part of one surviving system, hurtling | | | | some particular goods. |
| through space together. So the business people of | | | | 3. Cartel is an organization of independent companies, |
| the international global village must recognize that the | | | | producing the similar goods, which make the |
| time of cowboy capitalism is over. The abuse of any | | | | agreement in order to increase prices and to limit the |
| part of the world environment must be seen as | | | | output. There are such bright examples of cartels as |
| hazardous to the progress of all our fellow travelers | | | | Organization of Petroleum Exporting Cartel, the |
| on space ship earth. | | | | International Sugar Agreement and so on. |
| Nowadays there are 5 main forms of international | | | | 4. NTB means other non-tariff barriers, which include |
| business: | | | | the wide variety of barriers ranging from bureaucratic |
| - International trade in commodities and services | | | | delays to quality limits. These barriers also include |
| between different countries | | | | so-called safety norms and the deliberate creation of |
| - currency transactions is an activity related with | | | | customs difficulties. |
| moving of the money and its substitutes. | | | | 5. Financial limits and limits of foreign direct |
| - employing foreign assets This form of business | | | | investments belong to the barriers of international |
| includes licenses, patterns, know-how and so on. | | | | trade. |
| - foreign investments. The foreign investing activity is | | | | All these tariffs governments suppose to be essential |
| the process of transmission of the capital of one | | | | in order to protect what they see as strategic |
| country to another in order to get the profit. | | | | industries - notably agriculture, or some infant |
| Investments are divided into direct and portfolio. | | | | industries - without which the country would be in |
| – Assets and securities. | | | | danger if there was a war, as well as other jobs. |
| - International services are activity having no | | | | Abandoning all sectors in which a country does not |
| material form but bringing benefit. It includes | | | | have a comparative advantage is likely to lead to |
| transportation, tourism, engineering, insurance, | | | | structural unemployment in the short (and sometimes |
| banking, consulting and so on. | | | | medium and long) term. Other reasons for imposing |
| International trading balance is reflected in the below | | | | tariffs: |
| balances. Balance of trade, or other words visible | | | | - to make imports more expensive than |
| balance, reflects trade in goods. Trade in services | | | | home-produced substitutes, and thereby reduce a |
| (banking, tourism, insurance and so on) is reflected in | | | | balance of payments deficit; |
| invisible balance. There is also the balance of trade | | | | - as a protection against dumping (the selling of |
| that is the difference between what a country | | | | goods abroad at below cost price in order to destroy |
| receives and pays for its exports and imports of | | | | or weaken competitors or to earn foreign currency |
| goods. And the difference between a country's total | | | | to pay for necessary imports); |
| earnings from exports and its total expenditure on | | | | • to retaliate against restrictions imposed by |
| imports. And the present situation of the exports and | | | | other countries; |
| imports on a particular date is called current balance. | | | | - to protect 'infant industries' until the are large |
| A country has a favorable balance of trade when it | | | | enough to achieve economies of scale and strong |
| exports more than it imports. But when a country | | | | enough to compete internationally. |
| starts spending too much money on nontrade | | | | Foreign economic restructuring has effected the |
| activities its favorable balance of trade can turn into | | | | development of foreign trade, the banking system |
| an unfavorable balance of payments. | | | | and the role of Russian enterprises in the economy. |
| Adding to all what I’ve mentioned I would say | | | | The main point of the foreign trade reform are: |
| that there are 2 theories of international trade. | | | | - enterprises now have a right to conduct |
| Nations may have an absolute or a comparative | | | | international trade; |
| advantage in producing goods and services because | | | | - industrial enterprises are allowed to maintain hard |
| of factors of production (notably raw materials), | | | | currency bank accounts; |
| climates, division of labour, economies of scale, and | | | | - great emphasis is made on export and import world |
| so forth. The theory of absolute advantages belongs | | | | marketing technique; |
| to Adam Smiths. Smiths thought that the | | | | - inward investment by means of joint ventures is |
| development of international trade began when | | | | encouraged. |
| countries have different absolute costs on production | | | | One of the most serious problems facing Russian |
| of goods. So a country imports the goods for which | | | | economy is not convertibility of the ruble, which is a |
| in other countries the costs are cheaper. | | | | serious handicap in relations within trade |
| The farther of the second theory is David Ricardo | | | | counter-parts. The economic reform sets a task to |
| who also as Smiths supported the idea of free trade. | | | | make ruble convertible. |
| He thought that for the development of international | | | | Globalization is the world expansion of economic links |
| trade it is enough for countries to have just | | | | between countries and integration of economies of |
| comparative advantages. The majority of economists | | | | different countries to each other. On the contrary |
| believe in the comparative cost principle, which | | | | there is localization. Its supporters think that |
| proposes that all nations will raise their living standards | | | | globalization leads to losing by countries their own |
| and real income if they specialize in the production of | | | | culture and they are against the opening of borders. |
| those goods and services in which they have the | | | | So as the result of opposition of these two |
| highest relative productivity. | | | | tendencies globalization and localization one more |
| Next thing I feel like speaking about is world | | | | term appeared, which is called glocalization. The main |
| international trade organizations. In this context I | | | | idea of these term is saving culture, traditions, |
| can’t but remember The General Agreement on | | | | national character of a country at the same time |
| Tariffs and Trade (GATT), an international | | | | opening its borders for foreign trade with other |
| organization set up in 1947, had the objectives of | | | | countries. |