Case Analysis

Case 2

“During 1982, the dollar rose against other major currencies to its highest level since the beginning of floating exchange rates in 1973. The strength of the dollar provided some benefits to the economy by reducing import prices and controlling inflation. On the other hand the strong dollar caused severe problems by decreasing the cost competitiveness of United States exports.The rise of the dollar was associated with a large rise in the production costs of United States firms relative to foreign competitors. This rise in relative costs has at least temporarily reduced the international competitiveness of United States industry dramatically.

Imported Japanese cars accounted for almost one-forth of all cars sold in the United States in the early 80s. During the recession from 1979 through 1982, sales of American cars declined. In 1982, sales of domestically produced cars reached a 24-year low of 5.7 million; unemployment in the American auto industry exceeded 20 per cent. As a result of declining sales, the United States asked Japanese car manufacturers to limit their exports to the United States. In April 1981, the Japanese agreed to a voluntary quota of 1.7 million cars per year for three years. In April 1984, the agreement was extended a fourth year and the quota increased to 1.85 million cars. In 1985, the agreement ended. Japanese automakers immediately announced their intention to increase car exports to the United States.

Trade restrictions on Japanese cars have been debated in the United States for over 10 years.”

1.7.4 Develop the following ideas:

1. In general, nations realize that specialisation and trade benefit everyone.

(the advantages of global trade; the production of more goods; the improvement of living standards in the trading countries; the increased operating efficiency of the world economy)

2. In the 1980s the strong dollar caused severe problems for the United States economy.

(to rise against other major currencies; floating exchange rates; to provide benefits to somebody/something. by doing something.; to reduce import prices; to decrease the cost competitiveness of something.; to control inflation; a rise in the production costs: to reduce the competitiveness of something.)

3. Tariffs and quotas can stop foreign competitors from putting established domestic industries out of business.

(to use dumping - selling a product in a foreign country at a price lower than the cost in the home market; to gain an unfair share of a nation’s markets; to be forced out of business; domestic manufacturer; the foreign supplier; to be free to raise prices)

4. Trade restrictions also may protect an industry for which the country does not have an advantage.

(the necessity to produce the best product at the lower price; a trade deficit to be inefficient; to become uncompetitive in world markets; the imbalance in trade with Japan;)

1.7.5 Say it in English:

· плавающий валютный курс, уровень которого определяется на рынке под воздействием спроса и предложения

· возрасти по сравнению с другими валютами

· добровольно согласиться на количественные ограничения на импорт / экспорт товара в объеме... в год

· быть продленным еще на год

· во время экономического спада

· понизить стоимостную(ценовую) конкурентоспособность экспорта

· практиковать демпинг (предлагать большое количество товара на рынке по низким ценам)

· достичь самого низкого за последние 24 года уровня в 5,7 млн.

· составлять почти четверть чего-либо

· быть вытесненным из бизнеса

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