The World Trade Organization (WTO) is the only global international organization dealing with the rules of trade

between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the worlds trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. The WTO focuses on many different key areas, all of which are centered around, making all countries as stable and profitable as possible. One of these key areas of focus listed on the WTO website was the December Ministerial package on trade benefits for the poorest countries, and to also work on trade facilitation, export competition, S&D Monitoring Mechanism, a step forward on fisheries subsidies and a step forward on environmental goods and services as indicative issues which should be explored as part of the package. He said this would mean loads of work and challenges ahead and no guarantee of success, but, in my view it is worth trying and it is our duty to do so.(WTO) The WTO is made up of several countries that are thought to be able to fair and impartial to their own countries. The governing bodies are charged with making the decisions for all countries involved. The United States of America(USA) is one of these said countries. However, most importantly the USA is charged with making economic decisions for its own citizens. The USA government makes these decisions in the form of economic policy, Keri feels like the government needs to realize that what they are doing to the economy needs help. If they keep sending money towards the war and other countries then we won't have any money for us. They need to see that we are in a depression. In order for us to fix this problem we need to have more jobs here in the US and not over seas. Second, we need to start helping people who don't have money or homes to live in. As we can see in the news and the newspaper things are going to get bad before they get good. I think Obama needs to ask the kids of America what they think. When asked by Norby what she meant by Ask the Kids what they think, she responded with saying literally what it says. I think it is important at this point in our country and our current economic situation, to get all point of views. After all kids today do understand what it is going on, and for young adults that understand SSI etc, its important as it is their future retirement going down the drain at this point.

The governments trade policy also effects economic behavior. When the government imposes embargos are certain countries for various things, it makes the resource they have available a scarce commodity and drives the price up. For instance when trade embargos are placed on Saudi Arabia, the cost of oil doubles, or in some instances triples. This causes runs on gas and oil products, because America citizens fear there will not be enough supply to go around. The simulation focused on four areas of government trade policy, imports, exports, tarrifs, and FTAs. Both Keri and Norbychose domestic production and export of cheese and DVD players in the first section and chose to import corn from Uthania and Watches from Suntize. However in 2004 different routs were taken. Keri chose to enforce a quota of 8million on Suntize which made Domestic production 3.43. Norby however, a tariff of $35/unit. this caused imports from Suntize to be 2.87 and domestic production of 5.63, which appears to be the most profitable rout for our country. In 2005 Keri chose no tarrif which resulted in imports from Uthania and alfazia being at 37.28 million. Exports to Alfazia were at 32.87 and Exports to Uthania were at 8.92 and our balance of trade was at 4.04 million. Norby however chose to have a 6% tariff. Imports from Uthania and Alfazia to be at 33.49 in $ in millions. Exports to Uthania were 29.81 ($ in million). Exports to Alfazia were 7.75 ($ in million). This created a balance of trade for Rodamia of 4.08 ($ in millions). In 2005 even though both of us chose different routs we both came close to having the same results. During the last year, Both Norby and Keri chose to enter in FTA with bother Uthania and Alfazia. This simulation highlights the importance of currency. As in any market shifts in the demand or supply of a good or service affect the exchange rate, in this instance currency is the market. Three main factors cause the demand and supply curves to shift: Changes in demand for United States-produced goods and services and changes in demand for foreign-produced goods and services Changes in the desire to invest in the United States and changes in desire to invest in foreign countries Changes in expectations of currency traders about the likely future value of the dollar and the likely future value of foreign currencies (Hubbard & O'Brien, 2010).

Following the concepts we know about supply and demand an increase in United States interest rates or foreign countries making more money will cause the demand curve to shift to the right, this is also true if investors feel the future value of the dollar will rise in relation to other currencies. The inverse then is also true. If a country is making less money or if interest rates in the United States drop than the demand curve will shift to the left. Also if investors feel the future value of the dollar will be less this will shift the demand curve to the left. The supply curve follows basically the same rules, shifting to the right when the United States has an increase of income. This results in an increase of more goods not only made in the United States but foreign countries as well. If the demand for more foreign products occurs the supply curve of the U.S. dollar will shift to the right, because more purchases are being made in foreign currencies. Also if a countrys interest rates rise investing in these currencies becomes more attractive to the U.S. investor also creating a shift in the supply of the U.S. dollar. Last if the future value of a foreign currency is expected to increase relative to the dollar the supply curve of U.S. dollars will shift to the right. The inverse of supply is also true. Decreasing United States incomes will result in supply shifting to the left. If the foreign country expects their interest rates to drop then the U.S. dollar will shift to the left. Last if the future value of a foreign currency is expected to decrease then the U.S. dollar will shift to the left as investors are less likely to invest in such a currency. The world is moving towards a global economy larger than ever before. With this new type of market it is important to understand international trading. Every country is different and has special qualities that it possesses. The idea behind trading is to make the most money while using each countrys resources as efficiently as possible. One important issue is to try to export more than you import. Importing more than you export can lead to selling your long term standard of living differential to your trading partners for less expensive products today. This creates a better standard of living for your trading partners children at the possible expense of your countrys grandchildren. One way around this is free trade with other countries. When the United States leaders argue about free trade they are arguing that fewer trade barriers (tariffs, quotas, regulations) will lower the cost of moving goods from

one country to another. That would lead to increasing incomes for all countries involved (University of Iowa Labor Center, n.d.). On the surface that looks very appealing for most every country. As with many options that look too good to be true one must dig a little deeper. Positives for international trading are one country can specialize in one or two areas. This benefits the country, especially if it is an up-and-coming country. New technologies may be learned and will increase the possible product output making every country more productive and profitable. It also allows for competition in our country as well as our countrys producers the ability to expand into other countries markets. However there are negatives as well. Free trade can cause economies to collapse due to outsourcing of jobs to areas they may be cheaper to perform. There still are trade barriers for countries not in the free trade agreement (FTA). This could cause a country to trade with another country inside the FTA rather than another country outside the FTA even if that country produces a superior product, simply because of the higher tariffs. In economics, the law of comparative advantage says that two countries (or other kinds of parties, such as individuals or firms) can both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods. Even if one country is more efficient in the production of all goods (absolute advantage), it can still gain by trading with a less-efficient country, as long as they have different relative efficiencies. In economics, principle of absolute advantage refers to the ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources.Adam Smith first described the principle of absolute advantage in the context of international trade, using labor as the only input. Since absolute advantage is determined by a simple comparison of labor productivities, it is possible for a party to have no absolute advantage in anything;in that case, according to the theory of absolute advantage, no trade will occur with the other party. It can be contrasted with the concept of comparative advantage which refers to the ability to produce a particular good at a lower opportunity cost.

Sources

http://en.wikipedia.org/wiki/Absolute_advantage http://en.wikipedia.org/wiki/Comparative_advantage
WTO- www.wto.org