Foreign Trade and Economic Relations

Text 1

The significance of foreign trade and economic relations

It is hard to overestimate the significance of foreign economic trade links. There practically can be no question as to any nation’s dependence upon the world economy including the U.S., Russia, Germany, France, Great Britain, Japan.

 

The United States, for example, is almost entirely dependent upon the imports from the countries for such products as diamonds, bananas, coffee, tea, cocoa, nickel, tin. and natural rubber. Russia depends upon the imports of food stuffs, computers, television and electronics technology. Japan depends upon raw resources, etc. However, a number of countries manufacture similar production of high quality.

 

Casual observation suggests that imported goods compete strongly in many of the American domestic markets: Japanese cameras and video recorders, French and Italian wines, English bicycles, and Japanese motorcycles and autos are a few cases in point. Foreign cars have made persistent gains in American markets and now account for about 25 percent of total sales in the United States. Even the great American pastime — baseball — relies heavily upon imported gloves!

But world trade is a two-way street, and a host of American industries are highly dependent upon foreign markets. Almost all segments of agriculture rely heavily upon foreign markets — rice, wheat, cotton, and tobacco exports vary from one-fourth to more than one-half of total output. The chemical, aircraft, automobile, machine tool, coal, and computer industries are only a few of many American industries which sell significant portions of their output in international markets.

Russia successfully exports timber, oil, gas, steel, complex kinds of armament and many other things.

Trade patterns are of great significance.

Firstly, the exports of goods are substantially in excess of the imports of goods, which is characteristic of any developed country. There must not be any disbalance in the international trade.

Secondly, it is important to know: 1) to what countries the main part of exports is practiced and 2) what kind of production it is.

In the case of the export trade with highly developed countries currency receipts increase. Changes in net export, that is, in the difference between the value of a nation’s exports and that of its imports, have multiple effects upon the level of national income in roughly the same fashion as do fluctuations in the various types of domestic spending. A small change in the volume of imports and exports of any nation have magnified repercussions upon the domestic levels of income, employment, and prices.

With these points in mind, we need not belabor the significance of international trade for such nations as the Netherlands, Japan, Australia, and Great Britain, whose volumes of international trade constitute substantially larger fractions of their national incomes.

 

The peculiarities of international trade

Aside from essentially quantitative considerations, world trade has certain unique characteristics which require us to devote special attention to it.

 

Mobility differences. Though the difference is a matter of degree, the mobility of resources and production is considerably less among nations than it is within nations. American workers, for example, are free to move from Iowa to California or from Maine to Texas. If workers want to move, they can do so. Crossing international boundaries is a different story.

Immigration laws, not to mention language and cultural barriers, put severe restrictions upon the migration of labor between nations. But over the past decades great changes took place. A number of European countries joined the Union to promote free trade, in which a single currency — the Euro, was launched. A single labor and capital market came into effect in this Union.

But on the whole, different tax laws, different governmental regulations, different business practices, and a host of other institutional barriers limit the migration of real capital over international boundaries.

International trade is a substitute for the international mobility of resources. If human and property resources do not move readily among nations, the movement of goods and services can provide an effective substitute.

Each nation uses a different currency. Hence, an American firm distributing Hondas or Jaguars in the United States must buy yen or pounds to pay the Japanese or British automobile manufacturers.

Objectively, conclusion, as we will note shortly, is that the international trade is subject to political interferences and controls which differ markedly in degree and kind from those applying to domestic trade.

 

Vocabulary list:

1. toconsume — потреблять

2. internalmarket — внутренний рынок

3. vast — емкий (рынок)

4. GNP — валовой национальный продукт

5. netexports— чистый экспорт

6. tooverestimate- переоценить

7. excess— превышение

8. value— стоимость

9. domesticspending — внутренние расходы

10. labor— рабочая сила

11. mobility— мобильность

12. substitute— заменитель

 

Notes:

1. anapproximateindex — ориентировочный показатель

2. a limited domestic market — узкийвнутреннийрынок

3. exportsaretherouteforobtaininggoods — экспорт выступает способом получения товаров

4. the United States accounts for a diminishing percentage of total world trade — доляСШАвмеждународнойторговлевпроцентномотношенииуменьшается

5. absolute volumes of imports and exports — абсолютныеобъемыимпортаиэкспорта

6. merchandiseexports — доля товарного экспорта

7. similarproductions — аналогичная продукция

8. casualobservation — наблюдение, проводимое время от времени

9.... reliesheavilyupon —... в значительной степени зависит от

10. tradepatterns — структура торговли

11. currencyreceipts — валютные поступления

12. multipleeffectsuponthelevelofnationalincome — многостороннее влияние на уровень национального дохода

13. magnifiedrepercussions — серьезные последствия

14. a hostofotherinstitutionalbarriers — множество прочих институциональных барьеров

15. propertyresources — материальные ресурсы

16. a firm... distributing — фирма,... занимающаясясбытом

17. topay... manufacturers — рассчитаться с производителями

 

Ex 1.Work with a partner and discuss these comprehension questions on Text 1.

1. Why do many nations which have restricted resource bases trade?

2. Up to what value of GN P may imports of the nations which have restrictedresource bases run?

3. In which nations are merchandise exports as a percentage of GNP high?

4. What is the world’s leading nation in terms of absolute volumes of importsand exports?

5. What kinds of high technology similar production do you know? Name the nations which manufacture them.

6. Which goods does Russia export?

7. Which imported goods compete strongly in domestic markets?

8. What is meant by trade patterns?

9. What does the notion “net exports” mean?

10. What effects do changes in net exports have upon the level of national income?

11. What is meant by the notion “the mobility of resources”?

12. What factors limit the migration of real capital over international boundaries?

Ex 2. Find the English equivalents for the following in Text 1.

•государства, имеющие ограниченную ресурсную базу

•товары, необходимые для внутреннего потребления

•емкий внутренний рынок

•рост объемов экспорта и импорта

•с точки зрения абсолютных объемов

•наличие жесткой конкуренции импортных товаров навнутреннемрынке

•международная торговля — улица с двусторонним движением

•часть продукции... реализуется на международных рынках

•превышение импорта над экспортом

•дисбаланс международной торговли

•изменения величины чистого экспорта

•многостороннее влияние на уровень национального дохода

•колебания различных видов внутренних расходов

•жесткие ограничения на пути миграции рабочей силы

•различия в налоговых законодательствах

•международная мобильность ресурсов

•торговля подвергается политическому вмешательству