1. Ch.10 The Global Economy
10.2 Global Competition

2. Protectionism
Protectionism: the practice of the government putting limits on foreign trade to protect businesses at home.
Foreign competition can lower the demand for products made at home
Companies at home need to be protected from unfair foreign competition.
Industries that make products related to national defense need to be protected
Use of cheaper labor in other countries can lower wages or threaten jobs at home

3. Protectionism, cont’d
Tariff: a tax placed on imports to increase their price in the domestic market.
Quota: a limit placed on quantities of a product that can be imported.
Embargo: a ban on the import or export of a product.
Rare and usually used against another country for political or military reasons.
Current embargoes:
Cuba, Iran, North Korea, Syria, and China (weapons)

4. Free Trade
Free Trade: occurs when there are few or no limits on trade between countries.
It opens up new markets in other countries
It creates new jobs, especially in areas related to global trade, such as shipping, banking, and communication
Competition forces companies to be more efficient and productive
Consumers have more choices in the variety, prices, and quality of products
It helps countries raise their standard of living

5. Trade Alliances NAFTA: North American Free Trade Agreement
United States, Canada, and Mexico
EU: European Union
Most European countries
ASAN: Association of Southeast Asian Nations
Southeast Asian countries

6. Homework Section 10.2 Reading Activity and Graphic Organizer
Review questions on page 173, 1-3
Quiz Friday
Homework due Friday