International Trade

• What is protectionism?


  Protectionism is when a government seeks to protect domestic industries from foreign competition.
• What is a tariff?


  A tariff is a tax placed on imported goods from other countries.
• What is the tariff percentage on tennis rackets imported into the UK from China?


  The tariff on tennis rackets imported into the UK from China is 4.7%.
• How does a tariff affect the price of imported goods?


  A tariff increases the price of imported goods, shifting demand from foreign to domestic businesses.
• What happens to the price of British cheese in the USA when a tariff is placed on it?


  The price of British cheese in the USA rises when a tariff is placed on it.
• Why are American customers more likely to purchase American cheese after a tariff is imposed on British cheese?


  American customers are more likely to purchase American cheese because the tariff makes British cheese more expensive.
• What are the benefits of tariffs?


  • Protects infant industries
  • Increases government tax revenue
  • Reduces dumping by foreign businesses
• What are the disadvantages of tariffs?


  • Increases cost of imported raw materials
  • Reduces competition for domestic firms
  • Reduces consumer choice
• What is a trading bloc?


  A trading bloc is a group of countries that form an agreement to reduce or eliminate protectionist measures between each other.
• Name three of the largest trading blocs.

  The three largest trading blocs are the EU, ASEAN, and NAFTA.
• When was the European Union originally formed?


  The European Union was originally formed in 1993.
• How many countries were in the EU as of February 2023?


  As of February 2023, there are 28 countries in the EU.
• What does being a member of the EU include?


  Being a member of the EU includes free movement of goods and people.
• What are common external barriers in the EU?


  Common external barriers in the EU include tariffs on countries outside of the union.
• When did the UK vote to leave the EU?


  The UK voted to leave the EU in 2016.
• When did the UK officially leave the EU?


  The UK officially left the EU in 2020.
• What is the impact of trading blocs on business activity?


  • Higher costs from protectionist measures for businesses outside the bloc
  • Decreased competitiveness for businesses outside the bloc
  • Likely decrease in sales volume for businesses outside the bloc
• What are the benefits for businesses of belonging to a trading bloc?


  1. Access to more markets
  2. External tariff walls
  3. Infrastructure support
  4. Free movement of labour
• What is an external tariff wall?


  An external tariff wall is a tax applied to imported goods from outside the bloc.
• How does free movement of labour benefit businesses in a trading bloc?


  Free movement of labour allows businesses to source workers from a wider pool, potentially lowering wages.
• What rights do citizens of EU countries have regarding work in member states?


  Citizens of EU countries have the right to work in any Member State and to be treated equally as citizens of that State.
• What are the drawbacks to businesses of belonging to a trading bloc?


  1. Increased competition
  2. Common rules and regulations
  3. Retaliation from external countries
  4. Inefficiency due to reduced competition from outside the bloc
• How does increased competition affect small businesses within a trading bloc?


  Increased competition may be more challenging for small businesses as they have fewer resources to compete.
• What is the EU working time directive?


  The EU working time directive states that employees can only work a maximum of 48 hours per week.
• What can external tariffs lead to in terms of retaliation?


  External tariffs may lead to retaliation from countries outside of the trading bloc.
• How can trading blocs lead to inefficiency in businesses?


  Trading blocs can lead to inefficiency as there is less competition from businesses outside the bloc.
• What is trade diversion in the context of trading blocs?


  Trade diversion means trade is taken away from efficient producers outside the bloc and replaced by trade within the bloc.