KEY POINTS:
• Trade is something that people want to do, because:
—
They want to obtain goods and services made elsewhere
—
They want to be able to sell what they produce
—
Trade creates jobs at virtually every economic level
• Trade is fluid, the types of goods and services that
are traded between and among countries changes over time based
on economic conditions, changing consumer demands, evolution
of technology and many other constantly changing forces
• In some countries, trade is the major economic base
• Countries voluntarily agree to trade rules and trade
agreements because it is in their best national interest to
be able to trade
• Not all trade rules benefit every single interest group
in every country
• Without trade rules and agreements, international commerce
is not possible—without trade rules and agreements trade
can be unfair, especially to smaller countries
ACTIVITY 1: Explore the fluid nature of trade goods and services.
(9th and higher)
Research
and report on products and services that have moved from country
to country as economic conditions and technology have evolved.
In some cases products that were once made in the U.S. are
being made here again for various reasons, and in other cases
manufacturing partners in other countries begin to displace
their original partners.
For
example:
For
a very long time, large American automobiles dominated the
American market and in many cases were exported to other
countries. At the same time, European and Japanese auto
makers developed smaller and more fuel-efficient cars due
to the high cost of fuel and high taxes in those regions.
When
the energy crisis of the 1970’s hit America, low-cost
and fuel-efficient Japanese cars became very popular at
the expense of large American cars. Because (in part) they
were not meeting consumer demand, American car makers went
into a slump, and the Japanese auto industry gained huge
market share worldwide based in part on their economic success
in the U.S.
As
Japanese domestic labor became more expensive, production
of some components (engines, for example) was shifted to
lower wage Korea. Korean conglomerates used their knowledge
and partnerships with Japanese companies, plus domestic
trade barriers to imported cars, to develop a domestic auto
industry. In the meantime, U.S. automakers finally began
to offer attractive, well-made and fuel-efficient cars,
displacing some of the Japanese economy cars.
As
automated assembly systems were perfected and the threat
of U.S. tariffs loomed, the Japanese manufacturers begin
to open auto plants in the U.S. (as did European brands).
The Japanese also began to make luxury cars, competing with
traditional European status symbols such as Mercedes and
BMW. At the low end of the spectrum, Korean manufacturers
aggressively began to market inexpensive economy cars and
light commercial trucks, displacing their former Japanese
partners, especially in moderate-income countries. Consumer
trends in the U.S. also shifted back towards larger, American-made
vehicles in new categories such as mini-vans and SUV’s.
In
2001, Korean manufacturers began introducing cars aimed
at the luxury market, Japanese manufacturers were seen to
be stodgy, American car makers dominated the lucrative mini-van
and SUV markets, and European manufacturers once again were
making inroads in the U.S.
What
other examples can be found? (Hint: clothing manufacturing,
computer programming, musical instruments and motorcycles
are a few.)
Students
might also trace the evolution of a single product. For example
contrast the original Honda Civic with today’s model.
How if has changed physically, where it is priced relative
to other cars, how many units are sold now vs. then and so
on.
ACTIVITY
2: Focus on Rules Issues. (7th and higher)
A
number of interesting lesson ideas that focus on international
trade rules are available from the World Affairs Council of
Seattle in their program called “Approaching WTO Education:
How to Bring WTO into Your Classroom by Engaging Students
in International Trade Disputes.”
This
document is available for free download at:
http://www.world-affairs.org/GlobalClassroom/GCResources.htm
Suggestions
for Assessment
Originality of topic selected (non-obvious examples).
Documentation from reliable sources.
Grade for accuracy, completeness and demonstrated understanding
of the market forces that caused changes.
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