10.

International trade

I. Introduction to the topic −trade policy

International trade − the export and import of goods, services and intellectual property
−enables the countries involved to offer a wider range of goods. A country’s trade policy
involves measures to regulate foreign trade. The balance of trade (BOT) shows a country’s
trade flow. If it is in deficit, governments often take protectionist measures to make their
own producers competitive on the world market. They can limit free trade by imposing e.g
tariffs or quotas on imports. Another barrier to free trade is the granting of subsidies to
domestic producers to boost exports. Non-tariff measures like national standards, slow
administration and sanitary regulations are also considered protectionist tools.

Arguments for protectionism

 The main argument against free trade is definitely the defence of the country’s
economy  for example new, infant industries must be protected from foreign
competition
 The other major argument is the need to save jobs  workers in certain industries are
in danger of losing their jobs owing to foreign imports
 A state may introduce anti-dumping measures to protect domestic producers

Disadvantages of protectionism
 It results in higher consumer prices, and so stimulates inflation
 It may subsidise industries and companies that are operating inefficiently
 It reduces the competitiveness of third world countries, preventing them from
entering the world market

Liberalisation  free trade

This is an economic policy which aims at the abolition or reduction of trade
restrictions. It provides free movement of goods and services  so creating the conditions of
free trade between the countries involved. Free international trade allows a country to
specialise in goods in which it has comparative advantage, because of either resources or
expertise, therefore increasing its sales on foreign markets and making a greater variety of
goods available for consumers. It results in higher revenues and in the long run higher living
standards for citizens.

The WTO  the World Trade Organisation

The WTO, established in 1995, is an organisation operating a system of trade rules. Its
predecessor was GATT (the General Agreement on Tariffs and Trade). Its major function is
to dismantle the existing barriers (e.g agricultural subsidies). It also serves as a forum for
governments to negotiate trade agreements and settle disputes. These negotiations are called
rounds.
 Vocabulary exercises based on the introductory text

A. Match the words in the left-hand column with words or phrases similar in meaning
from the list opposite

1. flow a. selling in a foreign market below home market price

2. subsidies b. exchange of products for money

3. boost c. skill or knowledge in a particular field

4. protectionism d. related to farming

5. dumping e. concentrate activity in a particular field

6. specialise f. fostering domestic industry by means of import duties

7. expertise g. a series of recurring events

8. sales h. sums of money paid by the government

9. agricultural i. increase

10. rounds j. movement

B. For each item in the list below, find in the text a word or phrase given in bold that is
similar in meaning

1. strategy for regulating trade (two words) ………………………

2. difference in value of exports and imports (three words) ……………………….
3. taxes on imports ……………
4.limitations on quantity ………………………
5.obstacle ………………………
6. related to health ………………………
7.rivalry ………………………
8. uneconomically ………………………
9.elimination ………………………
10. remove, take down ………………………

II. Hungarian text

Exercise 1.

Cover the English words and expressions given in the footnotes and try to guess the English
equivalents of the underlined parts of the Hungarian text.
Exercise 2
After checking your guesses against the footnotes, give an oral summary of the text in English.
Uniós szabályok közt szervezetlenül

Népszabadság, Tanács István 2007. december 7.

A magyar mezőgazdaság nyert a kiszámítható uniós szabályozással és a támogatásokkal1, de

veszített a piaci versenyben2. Magyarország európai uniós csatlakozása előtt úgy gondoltuk:
Magyarországnak az lesz ebből az első nagy nyeresége3, hogy végre szabályozott viszonyok4
közé kerül az agrártermelés – mondja Mikula Lajos, a Fiatal Gazdák Magyarországi
Szövetségének elnöke5. A szövetség vezetői abban bíztak, hogy Magyarországon is hosszabb
távra tervezhető lesz a gazdálkodás6, jelentős agrártámogatás érkezik, és az ország növelheti
kivitelét7 az egységes uniós élelmiszerpiacra8.

A várakozások egy része teljesült9 – összegzi a 2004 májusa óta eltelt időszak tapasztalatait10
Mikula Lajos. A területalapú támogatási rendszer11a gazdák számára áttekinthető,
kiszámítható viszonyokat12 hozott. A támogatások lehetővé tették, hogy felgyorsuljon a
birtokkoncentráció13. Sok korszerű gépet is vásároltak a csatlakozás óta a gazdálkodók.

A termékek piaci elhelyezése14 azonban megnehezedett. Komoly problémák keletkeztek15 a

kertészeti ágazatokban16 és az állattenyésztésben17. A hazai termelők18 a belső piac egy részét
is elveszítették. Tömegével jelentek meg például lengyel és szlovák élelmiszerek a
nagyáruházak polcain19. Ezek nem minőségben, hanem árban bizonyultak jobbnak20 a hasonló
magyar élelmiszereknél.

Mikula Lajos hangsúlyozza: elsősorban az átlagos minőségű termékek21 terén vesztett

piacokat a magyar agrárium. Ennek nyilvánvaló oka22 a hosszú távú, egységes agrárstratégia
hiánya23. A szemben álló politikai erők24 véleménye leginkább abban különbözik25, hogy a

1
predictable regulation and subsidies
2
competition on the market
3
great benefit
4
regulated conditions
5
president of the Association of Young Farmers
6
farming
7
can increase exports
8
common food market
9
expectations have been met
10
summarises the experience of
11
single area payment scheme
12
clear and predictable circumstances
13
have enabled land concentration to accelerate
14
product positioning
15
problems arose
16
horticultural branches
17
animal breeding
18
domestic producers
19
on the shelves of big stores
20
proved better
21
average quality products
22
obvious reason
23
lack of agricultural strategy
24
opposing political forces
25
opinions differ
mezőgazdaságot egy csökkenő jelentőségű gazdasági ágazatnak26 tartsák-e, ahol csak az
általános versenyképesség27 és profitszerzés szempontjai számítanak28, vagy az ágazat
társadalmi beágyazottságát29, a vidéki népességet30 megtartó képességét is figyelembe véve
stratégiai fontosságú kérdésnek31 tekintsék.

1631 n

III. English text

Protests at EU deadline for third-world trade pacts

Ian Traynor in Brussels

The Guardian, 28 September 2007

1. Anti-poverty campaigners demonstrated in more than 40 countries yesterday to protest at

the European Union's insistence on sealing new free trade pacts with the world's poorest
countries this year.
2. Peter Mandelson, the EU trade commissioner, warned yesterday that 77 of the world's
poorest countries in Africa, the Caribbean and the Pacific would face "less generous tariff
rates" in trade with the EU unless they completed negotiations on new "economic
partnership agreements" (EPAs) with Brussels by the year's end.
3. The World Trade Organisation (WTO) has set the deadline for the talks, which opened
five years ago to liberalise trade between the EU and the world's poorest regions and phase
in the abolition of tariffs. Many developing countries fear the agreements will expose their
economies to a ruinous invasion by European goods, services and business. Brussels argues
that the pacts will create a more benign climate for badly needed European investment.

26
sector of declining importance
27
general competitiveness
28
profit-making matters
29
social embeddedness
30
rural population
31
issue of strategic importance
4. According to campaigners protesting yesterday, senior EU officials have been threatening
to cut aid to Africa if there is no breakthrough. Luis Morago, head of Oxfam International in
Brussels, said: "Threats to withhold aid and increase tariffs on exports have not helped but
simply piled on the pressure in an entirely unjust way. If EPAs are signed because of a WTO
deadline, rather than because they are good for development, they will fail."
5. Bibiane Mbaye, of ActionAid, said Brussels was using "strong-arm politics" to bully
African countries into signing up. Campaigners say the pacts would see "the dumping of
cheap agricultural products" at the cost of local producers.
6. In an attempt to rebut the critics, Mr Mandelson and the EU aid commissioner, Louis
Michel, released an open letter yesterday, arguing that the new pacts were long overdue: "The
negotiations are forcing us to face up to difficult issues ... No one believes the status quo is
working." 1633n

Important terms

seal a pact – establish a formal agreement between two countries

Economic Partnership Agreements (EPAs) – pacts to be signed in order to

create a free trade area (FTA) between the EU and the ACP
(Africa, Caribbean, Pacific) countries. They are a response to
continuing criticism that the non-reciprocal and discriminatory
preferential trade agreements offered by the EU are
incompatible with WTO rules
the WTO – an organisation formed in 1995 to control trade agreements between
countries and to set the rules on international trade (it replaced GATT)

liberalise trade – break down trade barriers like tariff protection to allow free
global competition for the provision of goods and services

abolition of tariffs – removal of taxes on goods coming into /going out of/ a
country

strong-arm politics – governments’ use of threats or force in order to persuade

other people to accept their requirements

Extended vocabulary

 ruinous invasion (of goods): a huge inflow of goods, liable to ruin /destroy/ local markets
 benign: favourable, beneficial, advantageous
 breakthrough: success (in reaching an agreement in these trade talks)
 withhold sg: hold back / not give / sg
 piled on: increased
 bully sy: use superior strength to force sy to obey
 to rebut (a criticism): to prove (the criticism) untrue/unfair
 the status quo: the existing, unchanged situation or condition

Comprehension questions

1. What were anti-poverty campaigners demonstrating over?

2. What are these new trade agreements called?

3. What were the EU’s original goals in trying to negotiate these agreements?

4. When did the WTO first begin these trade talks with the world’s poorest countries?

5. If these countries refuse to sign the new EPAs, what two things has the EU threatened to
do?

6. Why are many of these developing countries against this new trade pact?

7. How does Brussels feel about the new trade pact?

8. How have other organisations, such as Oxfam and ActionAid, reacted to the EU trade
deal?

9. What is one specific criticism that the anti-poverty campaigners have levelled against
these pacts?

10. What arguments have Mr Mandelson and M. Michel used to try to show the critics that
they’re wrong?

IV. Discussion questions

A. Discussion questions related to the text

1. If trade were liberalised between the EU and the world’s poorest regions and tariffs
abolished, which do you think would come out as the bigger winner – the rich EU or the
poor countries?

2. Do you think its right for countries that believe in free trade to use protectionist measures
against cheaper imports? What are some means governments use to protect themselves
from international trade?

B. Additional discussion questions

1. Outline some of the arguments in favour of free trade and some of the arguments against it
(i.e. its advantages and disadvantages).
2. What is the main objective of the World Trade Organisation? How does it work?

3. What are the advantages and disadvantages of e-commerce?

V. Role-playing exercises

19. E-commerce

Student:
You are a student studying business communication systems and are convinced that e-
commerce is the future. The owner of a small handheld computer store approaches you for
advice about whether he should open a website and set up an e-commerce department.
What advice will you give him on the potential advantages ?

Examiner:
You are the owner of a small store in the city centre that sells handheld computers and PDAs
(personal digital assistants). You’re thinking about opening a website and setting up an e-
commerce department, but need the advice of people who know more about e-commerce
than you, so you approach a student who is studying business communication systems.

20. Motivating staff

Student:
You are a motivational expert who specializes in giving advice to companies with high staff
turnover. A newly appointed CEO of a company with high staff turnover asks for your advice
on how to motivate his staff.

Examiner:
You have recently been appointed CEO of a company that faces a serious problem of high
staff turnover. Your job is to turn the company around and make it a place where staff will be
motivated to work. You consult a motivational expert for his advice.