Future of the central America free trade agreement

UNCLEAR IN WASHINGTON

 

1. Before you listen to the following broadcast match the key words and expressions in the left column with their translation in the right one.

1. to pass an agreement 2. to deal with 3. to reduce import taxes 4. to enforce a law 5. to appose an agreement 6. to gain new markets for the goods 7. sugar export limits 8. risk of job losses 9. free trade agreement 10. to escape duties (on)

a) заключать соглашение (договор) b) избежать (резко снизить) таможенные пошлины c) иметь дело с кем-л., обсуждать что-л. d) снижать импортные пошлины e) соглашение о свободной торговле f) риск потери рабочих мест g) применить правовую норму (закон); ввести закон в юридическую силу h) ограничения на экспорт сахара i) выступать против соглашения j) завоевывать новые рынки для своих товаров

 

Listen to the text; answer the questions below using the abovementioned key words.

1. What does the term CAFTA mean? Which members of such agreement can you mentioned? In which way do they influence upon the world policy and trade?

2. Describe the major principle of this agreement. Which major requirements of the agreement do you know?

3. Why do Democrats mostly oppose the agreement? Which major disadvantages of the agreement did they nominate?

4. Which major arguments in favour of the agreement did the office of the Trade Representative in Washington proclaim?

5. Why did Agriculture Secretary Mike Johanns praise CAFTA as good for American farmers?

6. Are there any relationship between free trade agreements and customs duty? Why do you think so?

 

Listen to the text again; check your answers; name the main idea and retell the story.

 

II. Read and translate the following texts and be ready for their discussion on the basis of active vocabulary, key terms quiz, review and discussion questions.

 

CUSTOMS AND DUTY

Every country has to ensure that the proportion of imports to exports has positive effect on its economy. Too many cheap imports can damage a country’s economy, as sales of the country’s home-produces goods will suffer. Too many expensive exports can also be harmful because few people will buy them. Therefore, each country has the right to impose duty om imported goods in order to control prices and protect its economy. It is evidence that the shipping line has received the goods (it’s the shipping line’s receipt).

Export Duty

Export duty is something imposed on goods when they leave the country (for example on oil exports from Russia). However, this kind of duty is not commonly imposed because in many cases it would make the goods too expensive for the world market.

Import Duty

This kind of duty is imposed on goods when they are brought into a country. There are two types of import duty:

Protective duty is imposed to prevent home producers losing business because of cheaper foreign imports. Importers in Italy, for example, may try to import shoes from South America as they are cheaper than Italian shoes; this process is known as dumping. This, of course, would be a threat to the Italian shoe industry. To prevent this, the Italian government would impose protective duty on South American shoes, which would increase the price so much that they would no longer be able to compete with Italian shoes.

Preferential duty is a lower rate of duty imposed on countries with which there is a trade agreement. Such agreements may be bilateral (between two countries, such as Germany and Israel) or multilateral (between three or more countries). Groups of countries which have trade multilateral agreements include NAFTA (the North American Free Trade Association, made up of Canada, USA and Mexico) and ASEAN (the Association of Southeast Asian Nations, made up of Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand). This lower rate of duty is imposed to encourage importers to trade with the preferred countries rather than with non-member nations. 2005 the United States signed a trade agreement with five Central American countries. The five are Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. Trade ministers from these signed the agreement in a ceremony at the Washington headquarters of the Organization of American States. The new treaty is known as the Central America Free Trade Agreement, or CAFTA. CAFTA would bring the USA one step closer to its goal of creating a free trade area. The area would include every country in the western half of the world, except Cuba.

Excise Duty

The purpose of excise duty is to raise money for the government. It is imposed on certain home-produces products such as luxury products, cigarettes, oil and alcohol.

Calculating Duty

Ad valorem duty is charged as percentage of the value of the goods, i.e. the more expensive the goods, the higher the duty.

Specific duty, also known as fixed duty, is calculated as a fixed sum of money per unit of quantity or weight, e.g. 5 cents per kilo, 10 dollars per 1000 units etc.

Compound duty, also known as mixed duty, is calculated using a combination of ad valorem and specific factors; both the quantity or weight and the value of the goods are taken into consideration. This kind of duty is imposed on goods where the prices fluctuate, in order to prevent the amount of duty falling below a certain minimum. For example, duty may be imposed on tea at a rate of 10% of the value (ad valorem duty). However, if the price of tea falls, steps must be taken to prevent the duty falling below a rate of $20 per 100 kg (specific duty). If this happens, specific duty will be charged in addition to the al valorem duty to keep the duty imposed at the minimum required.

Customs Procedure

If the goods being importing or exported are duty free (if no duty has to be paid on them), they have to be declared to the customs authorities but will immediately cleared for the further transportation. However, if goods are dutiable (if duty has to be paid on them), they will proceed through customs in one of the ways described here:

1. The goods are transported to the customs office at the border, the duty is calculated and the importer pays it (or the exporter, depending on the terms of delivery). The goods are then released for further transportation to their destination.

2. In case of containerized goods, the container is sealed by customs authorities at the place of departure, then transported to the customs office at the place of destination. Here the container is opened, the duty is calculated and the importer pays it. This eliminates the need for the goods to be inspected at every border they cross.

3. The third possibility is for the importer to store the goods in bonded warehouse, a specific warehouse where goods can be stored until the duty has been paid. This means the duty doesn’t have to be paid until the goods are needed (for example when the importer finds a buyer). In case, the importer proceeds as follows:

· The importer has his goods brought to the bonded warehouse for storage.

· In return, the warehouseman gives the importer a bond warrant as a receipt for the goods. The bond warrant is a negotiable document.

· The importer tries to find buyers for the goods while they are in bond.

· Should the potential buyer need to see samples of the goods while they are in bond, this needn’t be a problem. The importer goes to the warehouseman and obtains either a sampling order, which enables him to take away samples of the goods in bond; or an inspecting order, which enables him to take the potential customer to inspect the goods.

· Once the importer has found a buyer, he endorses the bond warrant and hands it over to the buyer. If he has found several buyers, each of them receives a delivery order which serves the same purpose as the bond warrant.

· The buyer takes the bond warrant (or delivery order) back to the bonded warehouse and pays the duty on the goods. In return, he receives a customs permit which means the goods can be released from bond.

· The buyer then takes the customs permit and bond warrant to the warehouseman, who hands over the goods in return.

(Based on: Heather Ferlicchia. Commercial English)

III. Here is a text which illustrates the major barriers to international trade operations. Read and translate this text from English into Russian and be ready for its discussion on the basis of active vocabulary, key terms quiz, review and discussion questions.

INTERNATIONAL TRADE

International trade is the voluntary exchange of goods and services between people in different nations. For thousands of years people have benefited from international trade, which provides them with products not available in their homeland. By the mid of 2000s international trade amounted about $2 trillion annually.

When making these exchanges with one another, some nations have an absolute advantage in the production. An absolute advantage is the ability to produce something with fewer resources. Most important for trade, however, is comparative advantage, which occurs when a producer has a lower opportunity cost of producing a given good or service than another. By concentrating their production on those products for which they have comparative advantages, nations can then trade and increase their standards of living. Although trade increased the standards of living for most people within each nation, some businesses and industries suffered because of trading freely. So, some people within each nation would appose the idea of trading freely with people and businesses in other countries. Moreover, most countries have put some buriers to trade, which keep competitors out of local markets.