Trade Restrictions

A.	Judging by what I’ve derived from our lectures, many nations impose limits on trade. I managed to single out the four main types of trade restrictions: tariffs, subsidies, quotas and cartels where a tariff is a tax placed on imported goods.
B.	As a matter of fact, tariffs are of two kinds - revenue and protective. A revenue tariff raises money for the government. For this reason, revenue tariffs are generally low so that consumers will continue to purchase the taxed goods. However, protective tariff taxes an imported good so that the price becomes as high as, or higher than, the similar domestic manufactured product.
A.	I take your point. Protective tariffs make imported products more expensive and encourage people to buy goods produced in their own country.
B.	Definitely.For example, if the cost of producing a pair of shoes is $20 in the United States and $10 in Italy, Italian shoes could be cheaper. Americans then would buy Italian shoes to save money. To encourage domestic shoe purchase, the federal government could levy a tariff of $15 per pair on imported Italian shoes.
A.	Then a subsidy can be thought of as a tariff in reverse. Instead of taxing the foreign product, the government gives a subsidy to the industry that is suffering from foreign competition. In the shoe example, the government would grant a subsidy to the nation’s shoe industry. Shoe manufacturers could then meet some of their production costs through the subsidy and charge less than foreign producers for their products.
B.	Indeed. Still, I suppose a nation can limit the amount of goods that can be imported into the country.
A.	It’s called a quota. A quota on shoes, for example, might limit shoe imports to 100 million pairs a year. If Americans buy 500 million pairs of shoes each year, most of the market will go to American producers. Usually, quotas are imposed when tariffs and subsidies have failed to protect domestic industries from foreign competition.
B.	But I know that sometimes a group of companies or countries band together to restrict competition. May be that is called “cornering the market”?
A.	Ask me another. Wait though. I believe you are wrong. It’s called a cartel.* The members of the cartel agree to limit the supply and control the price of a particular good. Members meet regularly to decide how much to sell and how much to charge for their product.
B.	At all events, I am all for tariffs, because to my mind they provide domestic job protection and aid industrial development. I also believe that tariffs are important to the national defence.
A.	It may well be true. Sometimes tariffs and subsidies are applied on a regional rather than a national basis. For example, in the late 1950s six Western European nations - Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany - formed the European Economic Community (EEC), usually called the Common Market. Later, Denmark, Great Britain, Greece, and Ireland also joined. The EEC established common tariffs against products from non-EEC nations. At the same time, the countries eliminated tariffs among themselves.
B.	What is more, specialisation and trade result in interdependence. Many nations do not want to depend on other countries for products necessary to national defence, such as oil and steel.
A.	Still I don’t doubt that all trade restrictions limit world trade, reducing the total number of goods and services produced. Trade restrictions also raise prices.
B.	By the way, does GATT have anything to do with the problem?
A.	Pardon?
B.	I mean the International General Agreement on Tariffs and Trade.
A.	Oh, yes. As far as I know, it encompassed 22 countries in 1947, later the group expanded to somewhat about 100 countries, unfortunately, I am not quite at subject.
B.	I know that signers of the GATT met periodically in an effort to lower tariffs and settle trade disputes. The GATT also restricted member countries from banning or limiting imports from the other participants. In 1995 the World Trade Organization became the successor to it.
A.	I am overwhelmed. ** We have got a real recital of facts and surmise.
B.	Sure. Let’s call it a day. ***

· to acknowledge that	· to explain that
· to surmise that	· to find out if/whether
· to certify that	· to guess if/whether
· to conclude	· to indicate that
· to estimate that	· to mean
· to state	· to recommend

Task 2. Work with a partner. Look at the dialogue and discuss what A. and B. say about the following subjects.

· поощрять приобретение чего-либо (обуви) на внутреннем рынке

· налог, которым облагают ввозимые в страну товары на основе их стоимости или количества, - инструмент государственной экономической политики (например, для защиты внутреннего рынка)

· обеспечить занятость на внутреннем рынке труда

· собирать/занимать/добывать/получать деньги

· облагать тарифом в размере... долларов с единицы какого-либо товара

· покрыть производственные расходы с помощью субсидии

· соглашение между производителями или потребителями одноименной продукции, предусматривающее взаимные обязательства по соблюдению и поддержанию устанавливаемых цен на соответствующие виды продукции, согласованных квот производства, разграничение основных районов сбыта и т.п.

· взыскивать/начислять за что-либо меньше, чем зарубежные производители

· вводить норму, долю, квоту касательно чего-либо

· уменьшить общее количество производимых товаров и услуг

· судя по тому, что я извлек из (содержания) лекции....

· получить в результате взаимную зависимость

· ограничить поставку и контролировать цену

· страдать от конкуренции (товаров) из-за рубежа

· подробное изложение фактов и предположений

Task 4. Use Supporting Materials to continue the dialogue about the World Trade Organization. Search the Internet to find further information about the WTO. Make use of helpful phrases from Dialogue 2: