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World Trade Organization

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Global Trading Advantages The possibility to increase benefits from economies of scale The breaking down of global barriers allows companies to benefit from the ... – PowerPoint PPT presentation

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Title: World Trade Organization


1
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2
Global Trading
3
Advantages
  • The possibility to increase benefits from
    economies of scale
  • The breaking down of global barriers allows
    companies to benefit from the largest and
    cheapest workforces, raw materials, and
    technology
  • The opportunity for smaller companies to quickly
    expand globally, having more choices when
    recruiting a workforce and the opportunity to
    target a larger customer base (which translates
    to greater earning potential).

4
Disadvantages
  • The subjection of human rights and human
    wellbeing to the needs of global capital are some
    theories against a global economy.
  • These companies may also gain power greater than
    that of any country, as many pharmaceutical
    companies have been accused of using their power
    to influence governments, so too could these
    super companies but to a much greater extent.
  • More disadvantages to having a shared global
    economy is the transportation of resources and
    the impact it has on the environment

5
Theories
  • This increase in globalization has created many
    new opportunities, such as niche markets, and
    requires everyone to keep up with globalization
    in order to stay competitive

6
Imports
  • Any good (e.g. a commodity) or service brought
    into one country from another country in a
    legitimate fashion, typically for use in trade.
    Import goods or services are provided to domestic
    consumers by foreign producers

7
Export
  • Any good or commodity, transported from one
    country to another country in a legitimate
    fashion, typically for use in trade. Export is an
    important part of international trade

8
Balance of Trade
  • The difference between the monetary value of
    exports and imports in an economy over a certain
    period of time.
  • The balance of trade is sometimes divided into a
    goods and a services balance especially in the
    United Kingdom the terms visible and invisible
    balance are used.

9
Trade Surplus
  • A positive balance of trade is known as a trade
    surplus and consists of exporting more than is
    imported

10
Trade Deficit
  • A negative balance of trade
  • Informally, a trade gap

11
Exchange Rate
  • Also known as the foreign-exchange rate, forex
    rate or FX rate
  • Specifies how much one currency is worth in terms
    of the other
  • For example an exchange rate of 102 Japanese yen
    (JPY, ) to the United States dollar (USD, )
    means that JPY 102 is worth the same as USD
  • The foreign exchange market is one of the largest
    markets in the world. By some estimates, about 2
    trillion USD worth of currency changes hands
    every day.

12
Barriers to Trading
  • General term that describes any government policy
    or regulation that restricts international trade.
  • The barriers can take many forms, including
  • Import duties
  • Import licenses
  • Import quotas
  • Tariffs
  • Subsidies
  • Non-tariff barriers to trade
  • Voluntary Export Restraints

13
Barriers to Trading
  • Embargo
  • Most trade barriers work on the same principle
    the imposition of some sort of cost on trade that
    raises the price of the traded products. If two
    or more nations repeatedly use trade barriers
    against each other, then a trade war results.
  • Economists generally agree that trade barriers
    are detrimental and decrease overall economic
    efficiency, this can be explained by the theory
    of comparative advantage. In theory, free trade
    involves the removal of all such barriers, except
    perhaps those considered necessary for health or
    national security. In practice, however, even
    those countries promoting free trade heavily
    subsidize certain industries, such as agriculture
    and steel.

14
What is the WTO
  • Deals with the rules of trade between nations at
    a global or near global level
  • An international organization designed to
    supervise and liberalize international trade.
  • Came into being on 1 January 1995, and is the
    successor to the General Agreement on Tariffs and
    Trade (GATT), which was created in 1947, and
    continued to operate for almost five decades as a
    de facto international organization.

15
Keeping it simple
  • Negotiating forum
  • Set of rules
  • Settles disputes

16
Negotiating Forum
  • Member governments go to help sort out trade
    problems
  • Born out of negotiations
  • Everything WTO does is a result of negotiations

17
Set of Rules
  • Negotiated and signed by the bulk of the worlds
    trading nations
  • Legal ground rules for commerce
  • Contract binding governments to keep their trade
    policies within agreed limits
  • Goal is to help producers of good and services
    conduct their business
  • While allowing governments to meet social and
    governmental standards

18
Specifics
  • 153 members
  • represents more than 95 of total world trade
  • is governed by a Ministerial Conference, which
    meets every two years
  • a General Council, which implements the
    conference's policy decisions and is responsible
    for day-to-day administration and a
    director-general, who is appointed by the
    Ministerial Conference. The WTO's headquarters is
    in Geneva, Switzerland.

19
To Do Today
  • Research global trading opportunities with other
    virtual enterprise firms.
  • Identify barriers to global trading.

20
As the semester progresses
  • Complete trading transactions with international
    firms.

21
Personal Finance
  • Continue to work on Lessons 1-5
  • Deadline for submission
  • Wednesday, October 1, 2008
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