Английский язык. Практический курс для решения бизнес-задач - Нина Пусенкова

– Diversification of the economy: If a country channels all its resources into a few industries, no matter how internationally competitive those industries are, it runs the risk of becoming too dependent on them. Keeping weaker industries competitive through protection may help in diversifying the nation’s economy.

– Lowering environmental standards: In the rush to meet the world demand for their exports, some countries may compromise on environmental standards. This is particularly true for less developed countries that do not have well defined environmental protection laws in place.

Methods of Protection

– Tariffs: Tariffs are taxes on imports. Tariffs make the item more expensive for consumers, thereby reducing the demand. Ad valorem tariffs are usually levied as a percentage of the value of the import, although sometimes a flat rate may be charged.

– Import quotas: Governments sometimes restrict the sale of foreign goods by imposing quotas. They limit the quantity of foreign goods that can be imported and help domestic producers by limiting the share of the market that can be taken by foreigners.

– Voluntary restraints: Sometimes governments negotiate agreements whereby a country agrees to voluntarily limit its export of a certain product. Japan voluntarily limited its export of cars to the United States in 1992 to 1.65 million cars per year.

– Subsidies: Another way to achieve the goals of protectionism is to make the domestic industry more competitive through subsidies.

Subsidies can be:

–Direct – outright payments

–Indirect – special tax breaks or incentives, buying of surplus goods, providing low-interest loans or guaranteeing private loans. For example, the U.S. subsidizes the sugar and dairy industries, among others.

– Trade ban: Sometimes governments ban trade with certain countries for political reasons. Governments also ban import of certain products to protect domestic industries. For instance, Japan bans importation of rice.

– Imposing standards: Health, safety and environmental (HSE) standards often vary from country to country. These may act as a barrier to free trade and a tool of protectionism. For example, the EU has very stringent health and safety standards that goods have to meet in order to be imported.

– Others: Apart from the legal restrictions there may be other less formal obstacles that impede trade. Cultural factors are one such obstacle.

Arguments for Free Trade

U.S. free-trade advocates typically argue that consumers benefit from freer trade. Free trade and the resulting foreign competition forces U.S. companies to keep prices low. Consumers have a larger variety of goods and services to choose from in open markets. Domestic companies have to modernize equipment and technologies to keep themselves competitive.

Any kind of protectionist measures, like tariffs, often bring about retaliatory actions from foreign governments, which may restrict the sale of U.S. goods in their markets. This may result in inflation and unemployment in the U.S. as the export industries suffer and prices of imports rise.

Measures of Trade

Balance of trade and balance of payments are two of the statistics most widely used to measure a country’s international trade position. Balance of trade is the difference between a nation’s exports and imports of both goods and services.

A «favorable» balance of trade, or trade surplus, occurs when exports exceed imports. A «negative» balance, or trade deficit, occurs when the imports surpass exports. From the mid-1970s through 2001, the U.S. ran persistent trade deficits.

The balance of trade alone does not give the whole picture. The detailed record of all economic transactions between a country and the rest of the world is called the balance of payments. This includes trade in:

– Goods and services; and

– Financial and non-financial assets.

The BoP is separated into two main accounts:

–Current account – records export/import of goods and services and interest payments. The merchandise trade balance is contained in this account.

–Capital account – records purchase or sale of assets or investments, like companies, stocks, bonds, bank accounts, real estate and factories.

If you buy an automobile made by a factory in Germany, the transaction will be recorded in the current account. However, if you buy the automobile factory or stock in the automobile factory, the transaction will be a part of the capital account.

Every international transaction automatically enters the BoP twice, once as a credit and once as a debit, resulting in two equal and opposite entries. A transaction that involves money flowing into the country is recorded as a balance of payment credit and anything that draws money out of the country is a balance of payment debit.

This system of double-entry bookkeeping tries to ensure that the current and capital accounts are balanced. However, due to accounting conventions and differences in the recorded values of transactions, this does not always happen. Accounting for these differences, called statistical discrepancies, makes possible the following fundamental identity of the balance of payment accounts:

Current account + Capital account + Statistical discrepancy = 0

Current Account

The current account consists of four sub accounts:

–Merchandise trade consists of all raw materials and manufactured goods bought or sold. Since early 1990s, the merchandise trade account has been combined with services to determine the «balance of trade».

– Services include tourism, transportation, engineering, and business services, such as law, management consulting, and accounting. Fees from patents and copyrights on new technology, software, books, and movies also are recorded in the service category.

–Income receipts record investment incomes made up of interest and dividend payments and earnings of domestic owned firms operating abroad.

–Unilateral transfers are payments that do not correspond to the purchase of any good, service or asset. These usually take the form of international aid, gifts, or worker remittances from abroad.

Capital Account

The capital account measures the difference between sales of assets to foreigners and purchases of assets located abroad. U.S. – owned assets abroad are divided into official reserve assets, government assets, and private assets. These assets include gold, foreign currencies, foreign securities, reserve position in the IMF, U.S. credits and other long-term assets, direct foreign investment, and U.S. claims reported by U.S. banks.

Foreign-owned assets in the U.S. are divided into foreign official assets and other foreign assets. These assets include U.S. government, agency, and corporate securities; direct investment; U.S. currency, and U.S. liabilities reported by U.S. banks.

Balance of Payments Deficit and Surplus

In theory, the current account should balance with the capital account. The sum of the balance of payments statements should be zero. Therefore, when a country buys more goods and services than it sells (a current account deficit), it must finance the difference by borrowing, or by selling more capital assets than it buys (a capital account surplus).

The accounts do not exactly offset each other, due to statistical discrepancies, accounting conventions, and exchange rate movements.

Measuring Imports and Exports

Imports: U.S. importers file tax documents with the U.S. Customs Service describing the type and value of imported goods. These reports are processed and tabulated to arrive at the overall level of U.S. imports. Inaccurate reports, delays in processing data, and smuggling can affect their value.

Exports: There is no tax on exports, so to collect information, the U.S. Department of Commerce developed a form called the Shippers’ Export Declaration (SED) form, which is filled out when goods are sent overseas. These are tallied to arrive at export totals.

The Bretton Woods Agreements Act of 1945 requires the publication of balance of payments information. The statistics are generally reliable although the collection process is often difficult, especially in case of data on travel, services, FDI and financial transactions.

Sometimes it is difficult to classify a good as an import or an export. Trade is usually tabulated on the basis of national origin rather than national ownership. If a product is shipped from the U.S. to Germany, it is considered a U.S. export and a German import. It makes no difference whether a foreign company owns the U.S. factory or if it is a U.S. firm in Germany that imports the product. If a U.S. company owns a plant in Brazil and sells a product to a Japanese company in Canada, the transaction is recorded as a Canadian import and a Brazilian export.

Source: www.newyorkfed.org

Essential Vocabulary

1. infant industry – «молодая» отрасль экономики

2. ad valorem (ad val) – «со стоимости», «адвалорный» (метод расчета налога, тарифа или вознаграждения в форме фиксированного процента от стоимости)

3. levy n – налог, сбор, взнос; арест собственности по судебному приказу

levy v – взимать, собирать (налог)

4. voluntary restraint – добровольное ограничение

5. tax break – налоговая льгота

6. trade ban – запрет на торговлю

7. health, safety and environmental (HSE) standards – стандарты по здравоохранению, безопасности и экологии

8. retaliatory action – ответное действие

9. balance of trade (ВОТ) – торговый баланс

10. favorable balance of trade – положительный (активный) торговый баланс

11. negative (unfavorable) balance of trade – отрицательный (пассивный) торговый баланс

12. merchandise (commodity) trade balance – баланс товарной торговли

13. capital account (с/а) – капитальный счет

14. real estate – недвижимость

15. entry n – бухгалтерская запись (проводка)

16. debit n – дебет, левая сторона счета

debit v – дебетовать счет, записать по дебету счета

17. double-entry bookkeeping – система двойной записи

18. statistical discrepancy – статистическое расхождение

19. international aid – международная помощь

20. remittance (rem) n – денежный перевод, платеж

remit v – переводить, отправлять деньги

21. official reserve assets – официальные резервные активы

22. securities n – ценные бумаги

23. reserve position – сальдо резервов

24. claim n – требование, право, претензия, иск, рекламация; участок земли, отведенный под разработку недр

claim v – требовать, претендовать; утверждать; возбуждать иск о возмещении убытков

25. Сustoms Service – таможенная служба

26. smuggling n – контрабанда

smuggler n – контрабандист

smuggle v – заниматься контрабандой

27. Department of Commerce (US) – Министерство торговли США

28. Shippers’ Export Declaration (SED) – экспортная декларация

Exercise 1. Answer the following questions.

1. What are the arguments that advocates of protectionism usually use? 2. What protectionist tools can governments apply to manage their countries’ international trade positions? 3. What do the US free trade advocates traditionally say to support their views? 4. What are the key measurements of trade? 5. What is the essence of the balance of trade? 6. How is the balance of payments structured? 7. How are exports and imports measured?

Exercise 2*. Match the following definitions with terms given below and make sentences with each terms.

1. With this term of settlement the exporter insists on receiving payment before shipping or dispatching the goods.

2. An order drawn and signed by the exporter (the drawer) addressed to the importer or the bank (the drawee) to pay the exporter (the payee) a certain sum on a specific day.

3. Any plant, machinery, equipment or accessories required for manufacture or production, either directly or indirectly, of goods or for rendering services, including those required for replacement, modernization, technological upgrading or expansion.

4. Items, which participate in or are required for a manufacturing process, but do not necessarily form part of the end-product. Items, which are substantially or totally consumed during a manufacturing process.

5. Goods, which can directly satisfy human needs without further processing.

6. Processing of or working upon raw materials or semi-finished goods supplied to the job worker so as to complete a part of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process.