Answer: 

• Exporting is the transfer or shipping of goods to a foreign country. Goods are exported out of a country.
• Importing is the transfer or shipping of goods into a country. Good come into the country.

Answer: Absolute advantage is a theory that states that a country has the ability to produce more of a good or service using the same amount of resources than another country would. It is based upon the idea that a country has a certain specialty and does this specialty better than another and thus can produce more of this product with less labor than another country – giving them an advantage and they should produce this for trade.

Answer: The theory of comparative advantage posits that a country has an ability to produce a good or service at lower levels of opportunity cost than other countries. The country should produce what they are more efficient at doing compared to another country, increasing overall production.

Answer: Free trade may restrain the power of the state and empower individuals, bring people together across distance and cultures leading to peace, make everyone wealthier and encourage basic human rights.

Individual freedom and empowerment often emerge as the primary benefit of free trade. Consumers retain the ability to choose from a globe-wide range of products instead of governmental forces leveraging power to reduce choice.

Answer: Integration allows governments to facilitate trade. Integration refers to the process of using agreements between countries to lower limits on the movements of products, capital, and/or labor. There are different levels ranging from a free trade area to a political union.

Answer: 

• Free trade zones are specially designated areas within a country that have separate laws designed to encourage trade
• Custom unions are a group of countries that have entered into an agreement to remove barriers to the movement of goods and services and to have a uniform tariff policy towards non-member countries.
• Common markets are a group of countries that have entered into an agreement to remove barriers to the movement of goods and services, to have a common tariff for non-members, and to allow the free movement of capital and labor within the market.
• Economic unions follow common markets and are even more integrated. For countries in such a union, economic policy should be harmonized between members, meaning the union attempts to follow the same economic policy. A common currency is also introduced as is a central bank for the entire union. The European Union currently serves as an economic union.
• Political union is the complete integration of political and economic policy, represents the final step before the movement to a new country. Presently, no examples of a political union exist.

Answer: 

• Offshoring refers to the movement of a business activity to another country. Offshoring often involves the use of a third party when entering a foreign country. The process is moved “offshore.” Company leaders establish facilities that remain under the overall organizational umbrella.
• Outsourcing refers to relinquishing organizational control of a business process and hiring a third party external to conduct the process. Companies outsource the software development function if a third party, not a group within the company, designs software for the company. This would be considered outsourcing, whether the third party resides in the same or in a different country.

Answer: 

• The WTO primarily focuses on opening member countries to trade. Member countries utilize the WTO as a forum for the negotiation of trade agreements and as the arbitrating party for settling trade disputes. While the WTO is often associated with the removal of trade barriers, the organization supports some trade barriers. The barriers may be established to protect consumers, prevent the spread of disease, serve as punishment for failing to follow WTO trade rules, or, to assist developing markets. In cases where barriers exist, the WTO encourages transparency and consistency. Together, these forces increase predictability for outside businesses and investors.
• The WTO helps establish tariff rates.
• The WTO adjudicates trade disputes.

Answer: The European Union is headed by the European Council. The Council of the European Union is the main decision-making body of the EU. There is a single currency in the EU, the Euro. The EU agrees on the four freedoms – the free movement of goods, services, people, and capital. All goods that enter in any country have access to the entire EU. Labor moves freely within the European Union. Many outside countries have free trade agreements with European Union members. The EU tries to keep all members happy by resolving disputes in the Court of Justice.

Answer: The United States, Canada, and Mexico.

Answer: South America

Answer: 

• Association of Southeast Asian Nations Free Trade Area
• Asia Pacific Economic Cooperation
• Trans-Pacific Strategic Economic Partnership Agreement
• South Asian Association for Regional Cooperation

Answer: Protectionism refers to the desire to protect domestic businesses from the exports of foreign firms through governmental policy.

Answer: Government policies limiting trade: tariffs, embargoes, quotas, subsidies, import, licenses, other administrative barriers, currency convertibility.

Answer: 

In general, the arguments for protectionism focus on protecting a country’s well-being.

Arguments for protectionism:

1. Protect local industry, especially infant industry
2. Respond to local pressure
3. National security
4. Revenue
5. Consumer safety
6. Discourage immoral business practices
7. Protect the environment with sustainable practices
8. Cultural protection

Answer: 

• Free trade – I am Country A, I would argue for free trade in my country because it empowers individuals and allows for the most individual freedoms. People are exposed to more goods from all over the world. Free trade should benefit the country when we get goods from elsewhere, when the other countries can produce them at a more efficient rate, leaving my country to produce the goods we produce the best and most efficiently.
• Protectionism – Again, I am Country A. My country is enacting protectionism against the goods of another country to protect local businesses. If I stop the goods from coming in from other countries, this will allow my citizens to produce the goods and keep the profits in this country and not other countries. This could provide more jobs for the country.

Answer: 

History of the European Union

1950 European Coal and Steel Community founded by Belgium, France, Germany, Italy, Luxembourg, and the Netherlands

This was the first step of integration. These countries agreed to run all coal and steel industries under common management.

1957 The Treaty of Rome signed by Belgium, France, Germany, Italy, Luxembourg, and the Netherlands

On March 25, 1957 the members of the European Coal and Steel Community signed the Treaty of Rome to establish the European Economic Community. A common market, the treaty pushed for the removal of barriers to the flow of people, goods and services between the countries. This was a really big step in increasing the integration of the countries.

1962 A common agricultural policy introduced

In 1962, a common agricultural policy was established, which set a standard food price and policy across member countries. This was a smaller step in integration, but it still tied the countries closer together.

1968 All custom duties removed

In 1968, the members removed all custom duties or tariffs between each other and set a common tariff for imports from non-member countries. In effect, the European Economic Community became a customs union. This was a really big step in integration. This allowed for free trade among nations and reduced the barriers between countries.

1972 Currency exchange rates for member countries linked

The currencies of members were linked together in 1972. While each country maintained a separate currency, the fluctuations or movements of value between member currencies were allowed to move only within a set band, which linked currency values. This was another big move towards integration. Now the countries’ economies were linked together.

1973 Denmark, Ireland, and the United Kingdom join

More countries were added to the agreement

1981 Greece joins

1982 Spain and Portugal join

1986 The Single European Act passed

To increase the flow of trade, the Single European Act, passed in 1986, started a program to normalize trade regulations across members. This increased the integration of the countries.

1992 Treaty on European Union passed

The treaty set the ground work for a single currency and increased ties regarding foreign defense policy. This increased the integration of the countries and started the process of creating the Euro. With a single currency the countries would be significantly tied together and travel between the countries would be the easiest it had ever been.

1993 The European Union agrees on the four freedoms – the free movement of goods, services, people, and capital

By agreeing upon these four freedoms the countries had free trade of goods and people for jobs.

1995 Austria, Finland, and Sweden join

Austria, Finland, and Sweden joined in 1995, and the Schengen Agreement in the same year allowed for passport-free travel for many European Union members.

2002 Euro coins and notes begin circulation

With a single currency the countries were now even closer.

2004 The Czech Republic, Cyprus, Estonia, Latvia, Lithuania, Hungary, Malta, Poland, Slovenia and Slovakia join

2004 Bulgaria, Romania, and Turkey become candidate countries

2004 Treaty establishing a European Constitution

The European Constitution in 2004 was designed to reform management of the EU and to create a European Foreign Minister to speak with one voice for members on foreign affairs. With France and the Netherlands voting against the proposed constitution, the treaty was not unanimously approved. The treaty represented the first major setback toward continual integration.

2007 Bulgaria and Romania join

2007 Croatia and the Former Yugoslav Republic of Macedonia become Candidate Countries

2007 Treaty of Lisbon passed

With 27 members, the Treaty of Lisbon was passed in 2007 with the goal of streamlining operations and to increase integration.

2010 Iceland becomes a Candidate Country

The European Union is the world's most integrated union of countries. I think that the EU is step up very diplomatically because of its history. The councils are voted upon by the countries and speak for the entire group. The member nations started out wanting to work together and this has continued throughout the development of EU.

Answer: 

• The Southern Cone Common Market, or Mercado Comun del Sur in Spanish, was founded in 1991 by the Treaty of Asuncion. The organization seeks the eventual elimination of barriers to trade, development of joint policies toward non-members, and a common currency. The Andean Community introduced a free trade area and actions were taken to facilitate trade between members. The North American Free Trade Association (NAFTA) is the only agreement covering an entire continent. The United States, Canada, and Mexico formed NAFTA on January 1, 1994, leading to the world’s largest free trade area. MERCOSUR and the Andean Community are similar to NAFTA as they are all agreements that increase integration. All countries still have separate currencies. NAFTA is the largest and has made great strides in creating free trade between the US, Canada, and Mexico. The Andean Community has had important and positive effects on the economies of the member countries. MERCOSUR is still developing and there are still many barriers. However, it has protected the member countries through the use of tariffs.

Answer: 

• There are many different attempts at integration in Africa. Many of these integrations are based upon location or proximity to the other countries. A few countries have entered into agreements with multiple groups. There is not a single, overall agreed upon economic integration. Overall, these lists show there is lots of room for integration and economic ties in Africa.
• In order to integrate, countries must first have stable and secure governments. There need to be clear rules for the integration and fair ways to enforce these rules. Political stability is needed to integrate with other countries.

Answer: 

• I feel that this act offers both advantages and disadvantages to American businesses. The disadvantages would be that American businesses may not be able to gain contracts with foreign governments and businesses. In some countries it is customary to present a bribe when making an offer. However, the advantages could be the reputations and quality of the work. When an American company gets the job, it is assumed this would be based upon the offer and the quality of the work, not a bribe.