Issues of International Trade

Trade issues occasionally dominate and are a continuing theme of the international scene: the global market, sweatshops, child labor, trade deficits, the euro, sanctions, tariffs, embargoes, and the EU, NAFTA, WTO – the seemingly endless alphabet of interest groups, treaties, organizations, and trade agreements. As a classroom topic, international trade has the great advantage of providing ready-made material for teachers wanting to engage student interest in current events. On the other hand, the complexity of the issues surrounding trade is daunting. While economic reasoning doesn’t guarantee resolution of the issues, it is a powerful tool of critical thinking that brings clarity to the discussion of current events. The ability to determine comparative advantage through opportunity cost, the ability to identify incentives and predict resulting behavior, and the ability to use supply and demand analysis of particular labor and resource markets, help students to set aside the emotion of international trade issues and cut through the rhetoric of media reports. This workshop will offer examples and classroom activities that help students build a foundation for their opinions on the news of the day.

Lesson Outline

Lesson 1: The Basics Still Apply: Domestic or International, A Market is a Market

• Key Terms and Concepts: Scarcity; Incentives; Specialization; Rational Choice; Voluntary Exchange; Comparative Advantage; Opportunity Cost
• Activity: The Magic of Markets; Tag Check

Lesson 2: Bridges and Barriers to Trade

• Key Terms and Concepts: Trade Barrier; Tariff; Subsidy; Trade Agreement; Quota; Protectionism; Embargo; Sanction; Public Choice Theory
• Activities: Tic-Tac-Toe Tariff; The Euro: Currency Exchange and Transaction Costs
• Exercise: U.S. Sugar Policy – A Sweet Deal?

Lesson 3: Trade and Labor: Sweatshops

• Key Terms and Concepts: Human Capital; Labor Markets; Opportunity Cost; Productivity; Unemployment; Voluntary Exchange
• Activity: Standing Up for Sweatshops?

Lesson 4: Trade and Jobs

• Key Terms and Concepts: Human Capital; Labor Markets; Unemployment; Imports/Exports; Productivity; Voluntary Exchange 
• Activity: The Giant Sucking Sound – Job Woes or Trade Flows?

Lesson 5: Trade and the Environment

• Key Terms and Concepts: Commons or Common Property; Opportunity Cost; Incentives; Property Rights
• Activity: Trash

Lesson 6: The Balance of Payments Always Balances

• Key Terms and Concepts: Balance of Payments; Capital Account; Current Account; Export; Import; Trade Deficit; Trade Surplus
• Activity:  Balance of Trade Among States

Lesson 7: International Monetary Exchange

• Key Terms and Concepts: Currency Exchange; Exchange Rate; Floating Exchange Rates; Demand; Supply; Market Clearing Price; Transaction Cost
• Activity:  Foreign Currency and Foreign Exchange

Resource List

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