Trade restrictions: tariffs, subsidies, quotas and cartels.

There are four main types of trade restrictions: tariffs, subsidies, quotas and cartels. A tariff is a tax placed on imported goods. Tariffs are of two kinds - revenue and protective. Revenue tariff raises money for the government. Protective tariffs taxes an imported good so that the рriсе becomes as high as, or higher than, the similar domestic manufactured product. Then а subsidy can be thought of as а tariff in reverse. Instead of taxing the foreign product, the government gives а subsidy to the industry that is suffering from foreign competition. Definitely а nation can limit the amount of goods that can be imported into the country. It’s called а quota.

Sometimes а group of companies or countries band together to restrict competition. It’s called а cartel. The members of the cartel agree to limit the supply and control the рriсе of а particular good. Members meet regularly to decide how much to sell and how much to charge for their product.

 

The World Trade Organization. European financial sector

The World Trade Organization (WTO) is an organization which control and liberalize international trade. The WTO has 153 members.

The WTO’s overriding objective is to help trade flow smoothly, freely, fairly. It does this by:

• Administering trade agreements

• Acting as a forum for trade negotiations

• Settling trade disputes

• Helping developing countries in trade policy issues, through technical help and training programs

• Cooperating with other international organization

 

Forex.

" Forex" is the Foreign Exchange Market, where people buy and sell foreign currency.

Currencies are traded in pairs, for example Euro/US Dollar or US Dollar/Japanese Yen.

Foreign money held by a government to support its own currency.

Forex trading begins each day in Sydney, and moves around the globe as the business day begin in each financial center, first to Tokyo, London, and New York,. It's a 24-hour market, and investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

The Forex market is considered an over the counter (OTC) or interbank market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

8. Countertrade

Countertrade means exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money.

Coburn Tool Corporation, an American manufacturer of large and small machine tools and parts, gears, valves, and bearings, was a major supplier to industries and companies world-wide. Because of crises in many of the countries in which Coburn did business.

A major market for Coburn is products had until recently been Brazil.

In the fall of 1984, however, a unique proposition was received at Coburn is head office near Cleveland, Ohio, from a Brazilian commodities broker.

CIC is offer was essentially this: in exchange for US $ 400000 in assarted gears, Coburn would receive the equivalent in Brazilian shoes, which it could sell in the American market.

 

Types of businesses

ADV:

Sole proprietorship	Partnership	Corporation
Easy to organize	Easy to organize, Decision can be made quickly	Limited liability, unlimited life
Decision can be made quickly	Profits are shared with only a few people	Ability to raise very large amounts of money
Owners receive all profits	The owners are responsible for success or failure of the business	Easy to ownership transfer

 

DIS ADV:

Unlimited liability	Liability is still unlimited	Complex forms must be filed with the state a federal government
limited life	Limited life	Profits are subject to double taxation
		A corporations owners do not directly control the business.

 

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