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Standard VIII. Import/Export and Balance of Trade... Achievement Standard:
Relate balance of trade concepts to the import/export process.
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| A. The Importing/Exporting Process | |
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Level 3 (Secondary) - Performance Expectations: Explain how historical
events have contributed to the formation of strategic trade alliances.
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TIME
REQUIRED:
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Two
50-minute class periods
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RECOMMENDED
GRADE:
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Grades
11-12
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MAJOR
CONCEPTS:
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Formation
of strategic trade alliances;
most-favored nation (MFN) status; free-trade zone; customs union; common market; General Agreement on Tariffs and Trade (GATT); European Community (EC). |
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INSTRUCTIONAL
OBJECTIVES:
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1.
Recognize differences between most-favored nation status, free
trade zones, customs unions, common markets, and trading
communities.
2. Identify concerns within the European Community (EC) relative
to
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MATERIALS:
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RATIONALE:
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During
the Depression of the 1930’s, the United States passed the Smoot-Hawley
Act in response to the protectionism felt by citizens and government.
This act caused a tariff to be imposed, which blocked world trade, contributed
to the great worldwide depression, and indirectly created the economic,
social, and political unrest which led to World War II.
After World War II, in 1948, 23 nations met in Geneva, Switzerland to draw up the General Agreement on Tariffs and Trade (GATT). GATT now has 88 member nations, and the major tenets of the agreement are to provide member nations with non- discriminatory treatment in regard to tariffs, customs, regulations, and taxes. All member are accorded “most-favored nation” (MFN) status, which guarantees each to have equal treatment in trade with other members nations, regardless of political and social differences. To encourage international trade, governments have established a hierarchy of trade, each offering a more complex involvement by the trading partners as well as the international trading companies. Free-trade zones are enclosed areas considered to be areas where no tariffs are charged. A customs union sets up a free trade area and specified a uniform tariff structure for members’ trade with nonmember nations. Direct and indirect export are export by companies producing for international markets; indirect export is where companies produce parts and other resources used in the manufacture of the exported good. The complexity and involvement in international trade increased toward what we know as a common market, where member nations trade as a single economic market. In a common market, or economic union, the members go beyond a customs union to establish an agreement partnership, wherein member nations agree to increasingly complex levels of involvement. The North American Free Trade Agreement (NAFTA) is an agreement between Mexico, the U.S., and Canada, to trade without tariffs, quotas, or other trade barriers. Currently under discussion is the Free Trade Area of the Americas (FTAA) which will eliminate trade restrictions between North and South American countries. Perhaps one of the oldest agreements has grown up, from a free-trade agreement to a declaration of “community,” and its name has changed over the growth period. The European Community, recently called the European Union, has become by necessity, a trading bloc of immense proportions and concerns. One of the terms of the agreement involves “freedom of movement.”
This can be used to demonstrate how far-reaching this agreement has evolved.
Not only is free trade involved, but citizens living within the 12 nations
who met at the Treaty of Maastricht (Netherlands) conference in 1992 will
(when the agreement is fully enforced) be guaranteed free movement within
the Community. This allows for supply and demand to set the price of labor
and money, as well as goods and services. With this “freedom of movement”
several concerns have been recognized—and must be addressed.
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PROCEDURE:
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1. After this introduction, give students the handout
and ask them to write why they feel each topic
presents a concern. What is the concern, and why?
(Each country has a different level of development,
of unemployment, of educational standards, of
social and cultural development, etc.)
2. Ask students to discuss and debate the implications of each topic. 3. If the instructor feels it is necessary, have
groups choose each of the l2 nations and research answers to why these
concerns exist for their nation, and solutions for the problems.
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| EVALUATION: | Evaluation should be on individual participation and group efforts.
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AUTHOR:
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Rosemary Piserchio, College of San Mateo, San Bruno, CA.. |
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EDITORS:
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Les
Dlabay, Lake Forrest College, Wildwood, IL.
Robert
Ristau, Eastern Michigan University (ret.), Ypsilanti, MI.
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Click here to download Microsoft Word version of the plan including handouts. |
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