International Marketing

The dynamic environment of international trade

1. Define:GATT, Protectionism,Balance of payments,IMF,Nontariff barriers,Current

Account,Voluntary export restraint "VER",Tariff, WTO.

A. GATT: it is a forum for member countries to negotiate a reduction of tariffs

and other barriers to trade. The forum proved successful in reaching those
objectives. With the ratification of the Uruguay Round agreements, the GATT
became part of the World Trade Organization in 1995 and its 117 original
members moved into a new era of free trade.

B. Protectionism: is the use by nations of legal barriers, exchange barriers, and

psychological barriers to restrain entry of goods from other countries.

C. Balance of payments: it is the system of accounts that records a nation’s

international financial transactions. It records all financial transactions between its
residents and those of the rest of the world during a given period of time.

D. IMF: it is an global institution created to assist nations in becoming and

remaining economically viable. It plays an important role in the environment of
international trade by helping maintain stability in the financial markets and by
assisting countries that are seeking economic development and restructuring.

E. Nontariff barriers: it is a restriction, other than tariffs, placed by countries on

imported products. They may include quality standards, sanitary and health
standards, quotas, embargoes, boycotts and antidumping penalties

F. Current account: it is a record of all merchandise exports, imports and services

plus unilateral transfers of funds.

G. Voluntary export restraint “VER”: it is an agreements, similar to quotas,

between an importing country and an exporting country for a restriction on the
volume of exports.

H. Tariff: it is a tax imposed by a government on goods entering at its borders.

Tariffs may be used as revenue-generating taxes or to discourage the
importation of goods or both reasons.

I. WTO: Word Trade Organization is an institution. It sets many rules governing

trade among its 164 members, provides a panel of experts to hear and rule on
trade disputes among members and issues binding decisions.

2. Discuss the globalization of the U.S. economy.

Globalization is the influence of businesses to develop international influence.

Many people have begun to protest the acts of globalization due to America's
involvement in WTO. Consequences of globalization include: environmental
 concerns, worker exploitation, domestic job losses, cultural extinction, higher oil
prices, and diminished sovereignty of nations.

3. Differentiate among the current account, balance of trade, and balance of

payments.

Current Accounts refers to a record of all merchandise imports, exports, and

services. Balance of trade is the difference between a country's imports and
exports. Balance of Payments is the system of accounts that records a nations
international financial transaction, this presents an overall view of its international
economic position.

4. Explain the role of price as a free market regulator.

When being imposed to tariffs and other protective restrictions, research shows
that US consumers pay about 70 billion per year in higher prices. The cost to
consumers for saving one job in protected industries was $170,000, much higher
than the wages and benefits of the average American manufacturing worker.

5. "Theoretically, the market is an automatic, competitive, self-regulating

mechanism which provides for the maximum consumer welfare and which best
regulates the use of the factors of production." Explain.

Market changes will happen anyway because the Nations will automatically
correct itself to the fluctuations in economy.