8.2.5 - World Trade Organisation

Today, we're diving into international trade. Can anyone tell me what international trade means?

Great! International trade is indeed the exchange of goods and services across nations. It allows countries to access products they do not produce. Why do we think countries engage in this trade?

Exactly! This leads to mutual benefits for trading countries. Remember, trade can be classified into two types: bilateral and multi-lateral.

Bilateral trade involves only two countries, while multi-lateral trade involves several. Let's remember the acronym 'BM' for Bilateral-Multi-lateral to keep this clear!

Excellent! Now, let’s summarize: International trade allows resource-dependent countries to obtain what they need while providing different goods and services globally. By trading, countries meet their economic needs efficiently.

Let’s discuss how trade has evolved. What was one of the earliest forms of trade?

Correct! The barter system involved directly exchanging goods without money. However, what were some issues with bartering?

Exactly. This led to the importance of introducing money, which has transformed trade. What do you think some historical trade routes were?

Yes! The Silk Route connected several civilizations across vast distances. It laid the groundwork for international trade today! As you study, remember to think about how trade changes with time and society.

Exactly! Trade evolves to adapt to societal needs. Let’s summarize what we covered about how trade practices evolved from barter to money-based systems.

Now, let's turn to the World Trade Organisation or WTO. Why do you think the WTO was created?

Correct! The WTO, established in 1995, aims to promote fair trade and reduce trade barriers. It also resolves trade disputes. What would happen without a governing body like the WTO?

Exactly! However, the WTO has faced criticisms. Can someone share what some concerns are?

Yes! Critics argue that it can widen the gaps between developed and developing nations. Remember the mnemonic 'WTO = Trade Overhatched' for remembering its goal to regulate fair trade!

Great! Always consider how trade organizations like the WTO impact global economics positively and negatively.

Let’s discuss the balance of trade. Who can explain what balance of trade means?

Correct! If imports exceed exports, we have a negative balance, and if exports exceed imports, we have a positive balance. Why should countries care about their balance of trade?

Exactly! Countries with negative balances have to borrow or rely on capital reserves. Always relate this to the health of a nation's economy. Now, can someone recall why measuring trade balance is vital?

Right! The balance of trade is a key indicator of economic health. Let’s summarize that the balance of trade influences a country’s economic strategy and relationships.

Now, let’s explore regional trade blocs. What do they do?

Good point! Regional trade blocs encourage trade between countries in close geographical proximity. What’s an example of a regional trade bloc?

Exactly! These blocs form to strengthen economic ties and allow members to reduce tariffs among themselves. However, what might be a downside?

True! It can lead to trade discrimination. A way to remember this is the acronym 'RTP' for 'Regional Trade Proximity.'

Great! So remember, regional trade blocs facilitate trade among member nations, promoting closer economic integration.