The Dynamic Environment of International Trade. Chapter 2
Q1.
General Agreement on Tariffs and Trade (GATT) - this is an agreement or intergovernmental tariff negotiation that was signed by 23 countries to reduce tariffs, eliminate trade barriers and liberalize trade.
Voluntary export restrains- this is a trade agreement between countries on the quantity of goods that should be imported and exported.
Portfolio investment- this can be referred to as the movement of money and assets or investing abroad for financial gain.
Protectionism- the act of protecting local business from foreign competition and protecting the infant industry, home markets, support capital accumulation, conserve natural resources and maintain employment (Cateora, 2016).
Q3.
The balance of payments can be defined as a statistical record that contains a country's international transactions in a particular period. The statistical record follows the rule of Double-Entry and contains all the exports and exports records, and these records should show a balance of total credits and total debits. Under the Balance of Payments, there is a current account- it records and balances the sales of goods, services, and unilateral transfers. In other words, the current-account concentrates on the movement of visible products, invisible services, and the unilateral transfers. Given that the balance of payment deals with the international financial transactions, a balance of trade is a component of the balance of payments as it refers to the difference between the value of are produced and imported and goods that are bought from abroad or the imported goods.
Q8.
The balance of payments records all the economic transactions in a double-entry book-keeping. The latter has two sides of transactions that is; credits (external purchasing such as sales of services, gifts from foreign governments, repayments of loans and more) and debits ( purchasing services, lending to foreigners, repaying capital and more). The balance of payments balances because one side records the sources of foreign purchasing power whereas the other records the uses of the foreign purchasing power (Mukherjee, 2012). In other words, there must be a balance between the current account and the offsetting transaction. On the hand, the balance of trade cannot balance since there is always a difference between the exports and imports or one may exceed the other.
Q18.
It is true that there is a difference in the import duties and according to this chapter, I understand that the difference are imposed by the government to import desirable goods and discouraging the importation of desirable goods. Note that the U.S pays a varying amount of these products concerning their value, composition, and quantity. Also, customs officials use the valuation system only because the products have different prices from manufacturing, delivery, and sales. This kind of tax is also known as Ad valorem which means ‘according to value’ (Beatty, 2012). Ad valorem explain the difference in import duties since the tax is imposed to the value of the product.
References
Beatty, J. F. (2012). Essentials of business law. Mason, OH: South-Western Cengage Learning.
Cateora, P. R., Gilly, M. C., Graham, J. L., & Money, R. B. (2016). International marketing. New York, NY:
McGraw-Hill Education.
Mukherjee Sampat. (2002). Economics for C.A. Professional Education Course 1. New Age International
Economics for C.A. Professional Education Course 1
Cengage Advantage Books: Essentials of Business Law
