TOPIC FIVE

INTERNATIONAL TRADE AND INSTRUMENTS OF TRADE POLICY

Learning objectives

 Explain the need for international trade

 Explain tariff and non-tariff trade barriers

 Explain arguments for and against free trade

 Arguments in favor and against Protectionism

 Explain the rationale for and stages of economic integration

 Explain the role of World Trade Organization (WTO) in international trade


The meaning of international trade

 Types of trade between countries

 Rationale for trade between countries
 Role of international trade
 Need for international trade

Theories of international trade

 Basis for trade and what are the gains from trade
 What is Pattern of trade?
 Discuss the theories
o Mercantilist view of trade
o Theory of Absolute advantage
o Theory of comparative advantage
 Theory of Absolute advantage
 State the law of Absolute Advantage
 The basis and the pattern of trade for Absolute Advantage
 Illustration of Absolute Advantage

Theory of comparative advantage

 State the law of comparative advantage

 Basis and the Pattern of comparative advantage
 Illustration of law of comparative advantage
 The case of No comparative advantage

Free trade Policy

 Meaning and Origin of free trade policy

 Arguments for free trade policy
 Arguments against free trade policy
 Advantage of free trade policy
 Disadvantage of free trade policy
Protectionism Policy

 Meaning and Origin of Protectionism

 Tools of Protectionism Policy
 Various arguments for protectionism
 Fallacious and Questionable arguments for Protectionism
 Arguments that stand up to close economic scrutiny (Qualified arguments for
Protectionism)
 Who Gets Protected

Tariff and Non-tariff Trade Barriers

 Tariff trade barriers

 Import tariff
 Export tariff
 Ad valorem, specific or compound tariff
 Optimum tariff
 Rate of effective Protection

Non-tariff trade barriers

 Import Quotas
 Voluntary Export Restraints
 Technical Administrative and other Regulations
 Export Subsidies
 Dumping

World trade Organization

 Objectives and Principles of WTO

 Brief history of WTO
 How does it work?
 Organization structure
 Critique of WTO
Economic integration

 Meaning
 Rationale of economic integration
 Condition Necessary for Successfully formation of economic integration
 Stages of economic integration
 Advantages of economic integration
 Disadvantages of economic integration
 Obstacles of Successfully economic integration