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Ch. 8
The Export-Import sector
Term | Definition |
---|---|
Net Exports= | Exports-Imports |
Specialization | the division of productive activities so that no one is self-sufficient |
Exchange | the process of trading |
Balance of trade | the difference between the value of our imports and our exports |
Negative balance of trade | when we import more than export (trade deficit) |
Exchange rates | the prices of foreign currency |
Offshoring | occurs when work that had been performed at home is sent abroad |
North American Free Trade Agreement (NAFTA) | provides for free trade among the US, Canada, and Mexico. Ratified in 1993 |
Central American- Dominican Republic Free Trade Agreement (CAFTA) | provides for eventual free trade among the US, Dominican Republic, Costa Rica, Honduras, Nicaragua, Guatemala, and El Salvador. |
The European Union (EU) | Free trade association of 28 nations |
China- ASEAN Free Trade Area | Formed in 2010, world's 3rd largest free trade area with China and Association of Southeast Asian Nations |
World Trade Organization (WTO) | The successor organization to GATT, which handles all trade disputes among member nations |
GATT | General Agreement on Trade and Tariffs. Drafted in 1947. Uniform system of rules for the conduct of international trade |
International Monetary Fund (IMF) | an organization of over 150 nations set up as a lender of last resort |
World Trade Organization (WTO) | Set up in 1995 as a successor to GATT. Purpose is to promote free trade. 3 major principles: 1) Liberalization of trade 2) Nondiscrimination - the most-favored-nation principle 3)No unfair encouragement of exports |
Most-favored-nation principle | members of the WTO must offer all other members the same trade concessions |