4frompage28 7 c international trade issues

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Unformatted text preview: erned about a Huge BOT Deficit? 6 2006 Distribution of U.S. Exports and Imports Insert Exhibit 2.4 from page 28 7 C. International Trade Issues 1. Events that Increased International Trade a. Removal of the Berlin Wall b. Single European Act c. NAFTA d. Inception of the Euro e. European Union Expansion 8 C. International Trade Issues 2. Trade Friction: Causes a. Using the exchange rate as policy b. Outsourcing c. Using trade and foreign ownership policies for security d. Using trade policies for political reasons 9 D. Factors Affecting International D. Trade Flows Trade 1. Three Factors Affecting Portfolio Investment a. b. c. International Tax Rates on Interest or Dividends Interest Rates Exchange Rates 10 10 E. Correcting a Balance of Trade E. Deficit Deficit 1. Why a Weak Home Currency is Not a Perfect Solution a. Counterpricing by Competitors b. Impact of Other Weak Currencies c. Prearranged International Transactions: J­curve Effect d. Intercompany Trade 11 11 J­Curve Effect Insert exh...
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