Global trade

Fair trade
Free trade

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Contents
1 Background
▪ Definition
▪ Methods

2 Global Trade
▪ Success Factors
▪ Benefits

3 Trade Barriers & Strategies

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Definition

Exchanging or trade of capital, goods and services

across global borders or territories

Commodities (i.e. machinery, capital goods, raw

materials, etc.) and services (i.e. travel and tourism,
banking, communication, advertising, etc.)
(Barasat Government College, 2021)

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 Methods

Free
Trade

Global
Trade
Fair
Trade

This Photo by Unknown (Barasat Government College, 2021)

Author is licensed under
CC BY-ND

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Free Trade VS Fair Trade
Free Trade
• Least amount of checks and balances
(such as labour laws, etc.)
Fair Trade
• “Fair” price reflects increased wages for
labourers in the supply chain (farmers,
factory workers, etc).

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Benefits of global trade Opti
mal
use
of
natur
al
resou
Availability of all types
of rces
goods

Specialization

Advantages of large-scale production

Stability in prices

Increase in efficiency

Development of the means of transport and communication:

Global co-operation and understanding

Ability to face natural calamities

Global peace and better standard of living

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Success Factors of Global Trade

Globalization Exchange Rate

Competitiveness

(Dubravska & Sira, 2015)

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Regional Trade Agreement

Free Trade Agreements (FTAs)

Preferential Trade Agreements (PTAs)
• A union in which member countries impose lower
trade barriers on goods produced within the union,
with some flexibility for each member country on the
extent of the reduction.
• E.g. World Trade Organisation (WTO), and G20.
• A special case of PTA where member countries
completely abolish trade barriers (both tariff
barriers and non-tariff barriers) for goods
origination within the member countries.
• E.g. Indonesia-Australia Free Trade Agreement (IA-
CEPA) and
• United States, Mexico- Canada, known as the
North American Free Trade Agreement (NAFTA).

Regional Trade
Agreement
Customs Unions (CUs) Common Markets and Economic Unions
• A special case of PTA where member countries • Removal of controls on free movement of   labour
completely abolish trade barriers (both tariff and capital.
barriers and non-tariff barriers) for goods • Adopting a single currency such as USD/IDR/CNY.
origination within the member countries.

(Pal, 2015)

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Trade Barriers

Tariff
• Distance
• Language
Barriers • Import Quotas
• Export Subsidiaries
• Import/export taxes • Restricted and prohibited
• Indonesia tax rates 10%-35% goods include:
 Narcotics, explosives,
including fireworks arms
ammunitions, and certain
species of flora and fauna.

Natural Nontariff
Barriers Barriers
(BCcampus Open Education,2021)

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What are nation’s strategies deal with
global trade?
• Quotas
Tariffs and
Non-Tariff • Taxes
• Registrations

• FTA
Regional
Trade
• PTA What are those
Agreement • CU Grandmas doin’?
• Unions

Protectionism
• Nationalism
• Populism

(Azdak, 2019)

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Kahoot Game

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TIME IS UP!

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 References
1. BCcampus Open Publishing. Barriers to trade

2. Barasat Government College. International Trade

3. Dubravska, M. and Sira, E. (2015). The Analysis of the Factors Influencing The International Trade of The Slovak Republic. Procedia Economic

23: 1210-1216.

4. Pal, P. (2015). Regional Trade Agreements in a Multilateral Trade Regime: An Overview.

5. Samue, Azdak. (2019). International Trade and Its Impact on the Global Economy.

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