1. INTERNATIONAL TRADE VOCABULARY Import – a product purchased from another country. Export – a product sold to another country. Global interdependence – idea that countries of the world are growing increasingly dependent on one another. Comparative advantage – ability of one country to produce a product at a lower opportunity cost than another country. Absolute Advantage- ability of one country to be more productive and produce at a lower cost per unit. Favorable balance of trade – a country exports more than they import. Foreign trade is profitable to the nation. Unfavorable balance of trade – a country imports more than they export. Foreign trade loses money for the nation.

2. FREE TRADE Arguments For Free Trade 1.Increased competition = improved products. 2.Trade restrictions damage export industries. 3.Specialization and comparative advantage lowers prices. 4.Greater political cooperation.

3. TRADE BARRIERS Protectionism – idea that country should impose barriers to international trade in order to protect domestic industries. Arguments Against Free Trade 1.Job security is threatened. 2.Protection of nation ’ s economic security is needed. 3.Protection of infant industries is needed. Trade Barriers Tariff (protective, revenue) Quota – a limit on the value or number of products to be brought in from another country Embargo – a refusal to trade with another country. Trade Cartel – a group of nations band together to control the supply & price of a product. (OPEC) OPEC COUNTRIES

4. TRADE AGREEMENTS NAFTA – North American Free Trade Agreement (US, Canada, Mexico) CAFTA – Central American Free Trade Agreement (US, Central American Countries WTO – World trade Organization – app. 150 nations seeking to increase trade and limit trade barriers. EU – European Union – 27 European countries have created a single economic entity.