MYP Individuals & Societies Trade Institutions Notes

How Do Trade Institutions Set The Rules Of Global Exchange?

1. Trade institutions typically aim to:
   1. reduce uncertainty (clear rules for tariffs, standards, and border checks)
   2. lower transaction costs (faster customs procedures, fewer documents, fewer inspections)
   3. create trust between countries (agreed procedures for negotiations and disputes)
   4. balance competing goals (economic growth, protecting jobs, national security, environmental and social concerns)

What Are Some Barriers To Trade And Why Do They Exist?

1. To understand trade institutions, you need to understand what they often try to change: trade barriers.
2. A trade barrier is anything that makes cross-border trade harder or more expensive. Barriers can be:
   1. Tariffs: taxes on imported goods
   2. Quotas: limits on how much can be imported
   3. Regulations and standards: rules about safety, labeling, or product requirements (these can be necessary, but can also be used to restrict trade)
   4. Administrative barriers: slow customs procedures, complex paperwork
3. Protectionism may be justified using arguments like:
   1. Protecting "infant industries"
   2. Safeguarding national security
   3. Responding to unfair competition.
4. However, it can also raise consumer prices, reduce choice, provoke retaliation and create severe tension between countries
   1. During the Great Depression in the 1930s, widespread protectionism is often linked by historians to worsening international relations before the Second World War.

How Do Trade Agreements Create Different Levels Of Integration?