International trade

I. Read and memorize the following words, word-combinations and word-groups:

trade deficit – дефіцит торговельного балансу

E.g. The amount by which the value of imports exceeds the value of exports in a given time period is a trade deficit.

trade surplus – активне сальдо торговельного балансу

E.g. The amount by which the value of exports exceeds the value of imports in a given time period is a trade surplus.

domestic industries – національна економіка

E.g. Microeconomic resistance to international trade arises from the fact that imports mean fewer jobs and less income for some domestic industries.

mix of output – номенклатура продукції

E.g. Trade not only alters the mix of output but also redistributes income from import-competing industries to export industries.

embargo – ембарго

E.g. An embargo is nothing more than a prohibition against trading particular goods.

tariff – тариф

E.g. One of the most popular and visible restrictions on trade is the tariff, a special tax imposed on imported goods.

quota – квота

E.g. A country can impose quotas, restrictions on the quantity of a particular good that may be imported.

trade-adjustment assistance – компенсація втрат від міжнародної торгівлі

E.g. Compensation to market participants for losses imposed by international trade is a trade-adjustment assistance.

II. Give English equivalents of the following:

заборона торгівлі окремими товарами

обмеження на кількість імпортованих чи експортованих товарів

обмежувати міжнародну торгівлю

змінювати номенклатуру продукції

III. Fill in the blanks with appropriate words:

equal produce increases deficit fewer less

negative surplus

1. During I989 the USA imported more than exported and so had a _______ trade balance.

2. If the United States has a trade deficit with the rest of the world, then other countries must have an offsetting trade _______.

3. Imports must _______ exports, since every good exported by one country must be imported by another.

4. A negative trade balance is called a trade _______.

5. When countries engage in international trade, they are expressing commitment to specialization and the reason is: specialization _______ total output.

6. Two countries that trade can together _______ more output than they could in the absence of trade.

7. Imports mean _______ jobs and _______ income for some domestic industries.

IV. Read and translate the text:

After examining the arguments for and against international trade, we try to draw some general conclusions about optimal trade policy.

U.S. imports represent 9 percent of total GNP. These imports include the consumer items as well as capital equipment, raw materials and food. While the country is buying goods and services from the rest of the world, foreigners are buying U.S. exports.

U.S. exports represent 7 percent of total output. As the figures indicate, U.S. imports and exports were not equal in 1989. Quite the contrary: the USA had a large imbalance in the trade flows, with many more imports than exports. The trade balance is computed as the difference between exports and imports: that is trade balance = exports – imports.

During 1989 the USA imported more than exported and so had a negative trade balance. A negative trade balance is called a trade deficit.

If the United States has a trade deficit with the rest of the world, then other countries must have an offsetting trade surplus. On a global scale, imports must equal exports, since every good exported by one country must be imported by another.

When countries engage in international trade, they are expressing the commitment to specialization, and the reason is: specialization increases total output.

Two countries that trade can together produce more output than they could in the absence of trade. So, the gain from trade will be increased world output and thus a higher standard of living in both countries.

Although the potential gains from world trade are perhaps clear, we must recognize one central fact of life: some producers have a vested interest in restricting international trade. Micro-economic resistance to international trade arises from the fact that imports mean fewer jobs and less income for some domestic industries. Exports represent increased jobs and incomes for other industries. Thus on a microeconomic level there are gainers and losers from international trade. Trade not only alters the mix of output but also redistributes income from import-competing industries to export industries.

Resistance to trade emanates from workers and firms that must compete with imports. Even though the country as a whole stands to benefit from trade, these individuals and companies may lose jobs and incomes in the process.

The means of restricting trade are many and diverse. Embargoes are outright prohibitions against import or export of particular goods. Quotas limit the quantity of a good imported or exported. Tariffs discourage imports by making them more expensive. Trade-adjustment assistance is a mechanism for compensating people who incur economic losses as a result of international trade, thus it represents an alternative to trade restrictions. To summarize: International trade permits each country to concentrate its resources on those goods it can produce efficiently. This kind of productive specialization increases world output.

V. Answer the following questions:

1. What do US imports include?

2. What are the gains from international trade?

3. What does resistance to international trade mean?

4. What are the means of restricting trade?

5. What is trade-adjustment assistance?

6. What is the role of specialization in the increasing of the total output?

7. In what sense does international trade restrain the exercise of domestic market power?

VI. Define the terms:

trade surplus imports

trade deficit trade-balance

exports embargo

gainers and losers tariff

quota import-competing industries

VII. Translate into English:

1. За відсутності зовнішньої торгівлі ціни на внутрішньому ринку залежатимуть від попиту та пропозиції в межах країни. 2. Тарифи зумовлюють підвищення цін на внутрішньому ринку та зменшення кількості проданих товарів. 3. Квоти обмежують імпорт, надаючи можливість вітчизняним виробникам підвищувати ринкові ціни. 4. Згідно із статистичними даними, в 1989 році обсяг імпорту США перевищував експорт. 5. У 1989 році дефіцит торговельного балансу США становив $ 113 мільйонів. 6. Проте в цілому експорт споживчих товарів США становив 6, 7 відсотка від валового національного продукту. 7. Згідно з міжнародною практикою залежність США від імпорту невисока. 8. Експорт ФРН, наприклад, становить 37 відсотків від загального валового продукту, а Тайвань експортує 50 відсотків.

VIII. Read and dramatize the following dialogue:

A.: To demonstrate the economic gains obtainable from international trade, we may examine the production possibilities of two countries.

B.: Excuse me for interrupting you. What are production possibilities?

A.: It's easy to understand. Production possibility is the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology. We want to demonstrate that two countries that trade can together produce more output than they could in the absence of trade.

B.: We are from France. Consider the production and consumption possibilities of just two countries – say, the United States and France.

A.: For the sake of illustration, we shall assume that both countries produce only two goods, bread and wine.

B.: Let it be. We know, the United States is capable of producing much more bread than France is.

A.: That is because, we have a greater abundance of labor, land and other factors of production. We assume the US is producing up to 100 billion loaves of bread per year. France on the other hand, is producing only 15 billion loaves per year, because it has little available land, less fuel and fewer potential workers. The capacities of the two countries for wine production are 50 billion barrels for the US and 60 billion for France. And what about consumption possibilities?

В.: І can conclude, that consumption possibilities are the alternative combinations of goods and services that a country can consume in a given time period.

A.: You are right. In the absence of contact with the outside world, the production possibilities for each country defines its consumption possibilities. Without imports, neither country can consume more than it produces. The obvious thing to do is to trade, to start exchanging wine for bread and vice versa. When international trade is permitted, each country can concentrate on what it does best.

B.: So, the gains from trade are due to specialization in production increasing total world output. As a result, with more goods and services, everyone's living standard is likely to improve. Thank you, Professor, for your interesting lecture.

IX. Make up your own dialogue using the following expressions:

restrictions on trade to end embargo

to make goods expensive to limit imports

domestic consumers to impose embargo

domestically produced goods to maintain embargo

to raise import prices to be competitive

X. Change these sentences according to the models:

Model A: Are they still discussing the problem?

No, they've just finished discussing.

1. Are they still examining the arguments for and against international trade? (to finish) 2. Has the country been buying goods and services from the rest of the world long? (to begin) 3. Is the country still importing more? (to stop) Model В: I don't like it when you miss lectures.

I don't like your missing lectures.

1. He enjoys it when she sings. 2. I hate it when he takes the floor. 3. I don't mind it if you play the piano. 4. She dislikes it when they make noise. Model C: What did he say about the film?

He said it was worth seeing.

1. What did they say about the agreement? (to reach) 2. What did he say about the document? (to sign) 3. What did he say about the proposal? (to think over) 4. What did she say about his article? (to read) 5. What did they say about his ideas? (to listen to)

XI. Translate into English using Gerunds:

1. Ці аргументи варто розглянути. 2. Цю статтю варто обговорити. 3. Припиніть розмовляти, будь ласка. 4. Починайте читати. 5. Ми не заперечуємо, щоб ви приєдналися до нас. 6. Я не ображаюся, коли мене критикують, якщо це справедливо.

XII. Communicative situations:

1. Country N refuses to contact with the outside economic world. Discuss the situation.

2. The USA has a positive trade balance. In what case? Give your remarks.

3. The USA and Ukraine are economic partners. What will this country export to USA and what imports will it have? What can you say about the situation?