Southwest Asia The Middle East FSMS 7th Grade Social Studies; Unit 3 Production, Distribution & Consumption (Voluntary Trade/Specialization/Trade Barriers/OPEC) October 18th – 19th; Georgia Standard SS7E6a.b.c

The Middle East Production, Distribution & Consumption Standard SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia (Middle East). a. Explain how specialization encourages trade between countries.

FIRST FIVE Agenda Message: Social Studies CDA II is scheduled for Thursday, November 1st. Study Guides will be distributed on Thursday, October 25th. New Standard: Explain how voluntary trade benefits buyers & sellers in SWA. E.Q. Wednesday; 10/17/12: What does Specialization encourage? Warm Up: What type of economy does Israel, Saudi Arabia, & Turkey have? TODAY WE WILL Specialization and Voluntary Trade Trade Barriers

FIRST FIVE Agenda Message: Social Studies CDA II will cover : Government Structure ,Governments of SWA, Economic Systems, Trade & Trade Barriers, Economic Growth Factors. New Standard: Explain how voluntary trade benefits buyers & sellers in SWA. Compare and contrast different types of trade barriers E.Q. Thursday; 10/18/12: What are Trade Barriers? Name three types of Trade Barriers. Warm Up: Define Specialization, Exports, & Imports TODAY WE WILL Complete Specialization and Voluntary Trade Trade Barriers Summary of Trade & Trade Barriers

FIRST FIVE Agenda Message: Homework Assignment is the 10-question Take Home Quick Quiz. Due Monday, October 22nd. New Standard: Explain how voluntary trade benefits buyers & sellers in SWA. Compare and contrast different types of trade barriers E.Q. Friday; 10/19/12: When OPEC was created in 1960, what were its objectives? Warm Up: Which type of economy does not exist in the modern world today? TODAY WE WILL Complete Specialization and Voluntary Trade Trade Barriers Summary of Trade & Trade Barriers

The Middle East Production, Distribution & Consumption Specialization If one country has something another country wants, the opportunities for trade begin to unfold. Specialization encourages trade among countries because no country produces everything it needs. The country selling the product makes a profit ($$), and the country buying the product gets what it needs.

The Middle East Production, Distribution & Consumption Specialization cont. In SWA, if a country has oil to sell (export), there are plenty of customers to buy it. Saudi Arabia, Iran, Iraq, & Kuwait export millions of barrels of oil every day. The U.S. buys (imports) oil from SWA because it does not have enough oil for our country’s needs. In turn, the U.S. sells (exports) food, medicines, and raw materials to SWA countries.

The Middle East Production, Distribution & Consumption Specialization cont. Turkey, having a more diversified economy, sells (exports) coal, textiles, and some foods to primarily European countries. Those countries then sell (export) needed transportation materials to Turkey. Israel buys (imports) rough diamonds and sells (exports) the finished product: cut and polished diamonds.

The Middle East Production, Distribution & Consumption Standard SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia (Middle East). b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos.

The Middle East Production, Distribution & Consumption Trade Barriers Trade barriers are anything that slows down or prevents one country from trading goods with another. Some trade barriers are put in place to protect local industries from lower priced goods made in other countries. Other times trade barriers are created due to political problems between countries. Trade is stopped entirely until the political issues are settled.

The Middle East Production, Distribution & Consumption Trade Barriers cont. The countries in Southwest Asia, as in most parts of the world, have experienced trade barriers at one time or another. Tariffs A tariff is a tax placed on goods when they are brought into one country (imported) from another country.

The Middle East Production, Distribution & Consumption Tariffs cont. The purpose of a tariff is usually to make the imported item more expensive than a similar item made locally. This sort of tariff is called a “protective tariff” because it protects local manufacturers from competition coming from cheaper goods made in other countries.

The Middle East Production, Distribution & Consumption Tariffs cont. Most countries have tariffs on goods imported from other countries. Quotas A quota is a different way of limiting the amount of foreign goods that can come into a country. A quota “limits” the amount of a particular product that can be imported or acquired in a given period.

The Middle East Production, Distribution & Consumption Quotas cont. For example, Israel could decide that only 1,500 cars could be brought into the country from Japan in a given year. That would make it more likely that people buying cars would have to buy Israeli-made cars if Japanese cars were not available.

The Middle East Production, Distribution & Consumption Embargos A third type of trade barrier is called an embargo. An embargo is when one country announces that it will no longer trade with another country in order to isolate the country and cause problems with that country’s economy. Embargos usually come about when two countries are having political disputes.

The Middle East Production, Distribution & Consumption Embargos cont. A good example of an embargo is the decision by the OPEC countries to stop all sales of oil and gas to the countries supporting Israel in the 1973 Arab-Israeli war.

The Middle East Production, Distribution & Consumption Standard SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia (Middle East). c. Explain the primary function of the Organization of Petroleum Exporting Countries (OPEC).

The Middle East Production, Distribution & Consumption Organization of Petroleum Exporting Countries (OPEC) The Organization of Petroleum Exporting Countries (OPEC) was created in 1960 by some of the countries with large oil supplies who wanted to work together to try to regulate the supply and price of the oil they exported to other countries. The first five countries to join OPEC were Kuwait, Iraq, Saudi Arabia, Iran, and Venezuela.

The Middle East Production, Distribution & Consumption OPEC cont. These countries, along with others who have joined since 1960, continue to decide; a. how much oil they will produce, and that determines b. the price of oil on the world market. When they produce less oil, the price on the world market goes up. When they increase production, the price on the world market goes down.