Business|Adults|Upper-Intermediate|16. Free trade

Market

1

a) A public gathering held for buying and selling goods or services: a weekly flower market.

b) An open space or a building where goods or services are offered for sale by multiple sellers: I bought the chair at the downtown antiques market.

c) A store or shop that sells agricultural produce: I buy vegetables from the corner market.

2

a) A system of exchange in which prices are determined by the interaction of multiple, competing buyers and sellers: an electronic market for trading pollution credits.

b) A similar system in which information or ideas are evaluated by multiple competing interests.

3

a) The buyers and sellers for a particular good or service or within a particular region: recent college graduates entering the US labor market.

b) The business transacted between such sellers and buyers: a slump in the housing market.

c) The price of a particular good or service as determined by supply and demand: The gold market climbed for the fifth straight day.

d) The demand for a particular commodity: a big market for denim; a growth market.

4 A standing commitment to buy and sell a given security at stated prices: a brokerage that made a market in the company’s stock.

5 A subdivision of a population considered as consumers: targeting the teen market; a new product for the West Coast market.

6 The market price: executed the sale at market.

To market

1. To offer for sale: merchants marketing their wares in the souk.

2. To try to make (a product or service) appealing to particular groups of consumers; promote by marketing.

3. To deal in a market; engage in buying or selling.

4. To buy household supplies: We marketed for a special Sunday dinner.

pic1_Business|Upper-Int|L16

Read the quotation and say if you agree with the idea

«Everyone lives by selling something.»

— Robert Louis Stevenson (1850-1894), Scottish novelist

Complete the sentences with the following words

  • environment [ɪnˈvaɪ(ə)rənmənt]
  • poverty [ˈpɒvətɪ]

pic2_Business|Upper-Int|L16


Answer the questions

1. Which of the statements in the previous exercise do you agree with?

2. How has the development of international markets affected:

a) you as a consumer?

b) your company/institution?

c) your country?

3. How do you think international markets will develop in the future?

Listen to the first part of a radio interview with Ian McPherson, an expert on international trade. What is free trade?

pic3_Business|Upper-Int|L16

Interviewer Ian McPherson

Interviewer: Perhaps you could summarise for our listeners the points you’ve made so far, Ian. You started by telling us what free trade is.
Ian McPherson: Right, I defined it as a situation in which goods come into and out of a country without any controls or taxes. Countries which truly believe in free trade try to liberalise their trade, that’s to say, they take away barriers to trade, they remove things which stop people trading freely. They have open borders and few controls of goods at customs.


Listen again and complete the definition of free trade the expert gives

Listen to the second part of the interview. Note down five things which stop people from trading freely

pic4_Business|Upper-Int|L16

Interviewer Ian McPherson

Interviewer: OK … then you gave us several examples of barriers to trade.
Ian McPherson: Yes, I said that there are two main barriers: tariffs and subsidies. Tariffs are taxes on imported goods, so that the imports cannot compete so well against domestic products. Subsidies are money paid to domestic producers so that they can sell their goods more cheaply than foreign competitors. Tariffs and subsidies are barriers to trade because when people are given a choice, generally they will buy the cheapest product.
Interviewer: You mentioned other barriers — less important ones, perhaps.
Ian McPherson: Uh-huh. I talked about quotas, which limit the quantity of a product which can be imported, and I discussed other restrictions on trade, such as expensive licences for importers, which add greatly to costs; and regulations relating to documents which a company must have to export its goods to certain countries. The documents can be very complicated and difficult to complete, so they slow down trading.

Listen to the third part of the interview and choose the correct answer


Interviewer Ian McPherson

Interviewer: I asked you if free trade was always a good thing.
Ian McPherson: And I answered, in principle, yes, it is a good thing, it’s beneficial to countries.
Interviewer: Why?
Ian McPherson: Countries which open their markets usually have a policy of deregulation, that’s to say, they free their companies to compete in markets, without government control or subsidies. Because of this, consumers in free-trade areas are offered a wider range of high-quality products at lower prices. People in those areas can move to the most productive parts of the economy and get better jobs with higher wages or salaries. OK?
Interviewer: So why do so many countries protect their industries and not allow free markets?
Ian McPherson: I gave three reasons, if you remember. Firstly, some people say, why should we practise free trade if other nations compete unfairly? For example, dumping is fairly common in international trade. When companies dump goods in overseas markets, they sell goods at very low prices, usually for less than it costs the company to produce the goods. Companies can usually only do that when they are heavily subsidised by their governments. Secondly, many people believe that strategic industries must be protected. These are industries that are very important to the economy: steel, power, communications and so on. In the United States, many Americans think that the steel industry should be protected against cheap imports from Brazil and other countries. If the US depends too much on foreign-made steel, they argue, this could be bad in a time of war. Finally, some say that in developing countries, industries need to be protected until they’re strong enough to compete in world markets. This is the infant industry argument: certain industries have to be protected until they can stand on their own feet, as it were. My final point was that, throughout the world, there is a trend towards liberalising trade and removing trade barriers. The most successful economies tend to have open markets, and most of their industries have been deregulated.



Listen again and answer the question

[h 5 p id=»9482″]

Interviewer Ian McPherson

Interviewer: I asked you if free trade was always a good thing.
Ian McPherson: And I answered, in principle, yes, it is a good thing, it’s beneficial to countries.
Interviewer: Why?
Ian McPherson: Countries which open their markets usually have a policy of deregulation, that’s to say, they free their companies to compete in markets, without government control or subsidies. Because of this, consumers in free-trade areas are offered a wider range of high-quality products at lower prices. People in those areas can move to the most productive parts of the economy and get better jobs with higher wages or salaries. OK?
Interviewer: So why do so many countries protect their industries and not allow free markets?
Ian McPherson: I gave three reasons, if you remember. Firstly, some people say, why should we practise free trade if other nations compete unfairly? For example, dumping is fairly common in international trade. When companies dump goods in overseas markets, they sell goods at very low prices, usually for less than it costs the company to produce the goods. Companies can usually only do that when they are heavily subsidised by their governments. Secondly, many people believe that strategic industries must be protected. These are industries that are very important to the economy: steel, power, communications and so on. In the United States, many Americans think that the steel industry should be protected against cheap imports from Brazil and other countries. If the US depends too much on foreign-made steel, they argue, this could be bad in a time of war. Finally, some say that in developing countries, industries need to be protected until they’re strong enough to compete in world markets. This is the infant industry argument: certain industries have to be protected until they can stand on their own feet, as it were. My final point was that, throughout the world, there is a trend towards liberalising trade and removing trade barriers. The most successful economies tend to have open markets, and most of their industries have been deregulated.


Use the words and phrases in the box to complete the table below

🔹dumping [ˈdʌmpɪŋ] — selling goods abroad at a price that is lower than the price in the domestic market

🔹laissez-faire [ˌleɪseɪˈfɛə]> — with minimally restricted freedom in commerce

🔹quota [ˈkwəʊtə]> — a prescribed number

🔹to comply [kəmˈplaɪ]> — to follow someone’s rules, commands, or wishes


Match the sentence halves

Use 🔗Page Marker to complete this task

1. They’ve quoted all regulations if you want the delivery to go through without problems.
2. We’re trying to break into the delivery date, let us know as soon as possible.
3. If you can’t meet an order, press one now.
4. You should carry out insurance cover for the shipment.
5. If you would like to place us a very good price for the consignment.
6. It’s essential to comply with a market survey before you make a major investment.
7. Let us know if you want us to arrange the Japanese market.

 

Tick the phrases appropriate for the question



Discuss the questions

1. To what extent do you have free trade in your country?

2. Should certain industries in your country be protected? If so, which ones?

3. Is free trade always a good thing, in your opinion?

Read the rules and do the exercise below

Grammar

Language review

Conditions

1. We use the First Conditional when we think the expected outcome of a situation is very likely.

a) If you give us a 10% discount, we‘ll place firm order of 2,000 units. (This is a promise.)

b) If you don’t deliver on time, we won’t order from you again. (This is a threat.)

c) Will you give us a discount if we double our order?

2. We use the Second Conditional when the outcome is less certain or is imaginary. We also use it in negotiations to make the offer or proposal less direct.

a) If you gave us a 5% discount, we would place a much bigger order.

b) If they didn’t have a guaranteed market, their business wouldn’t survive.

c) What discount would you offer us if we decided to go to another supplier?


Choose the correct verbs to complete the sentences

Naoko Nakamura, a buyer for a large Japanese department store, is negotiating with Li Bai, Sales Director for a clothing company in Hong Kong. Listen and complete the conversation

pic5_Business|Upper-Int|L16

Naoko Nakamura Li Bai

Naoko Nakamura: If I order 30,000 silk scarves, what discount will you offer us?
Li Bai: On 30,000, nothing. But if you buy 50,000 scarves, then we’ll offer you 10%.
Naoko Nakamura: ОК, I’ll think about that. And tell me, if we placed a very large order, say, er, 80,000 units, would you be able to despatch immediately?
Li Bai: We can normally guarantee to despatch a large order within three weeks. But if you order at a peak time, like just before the Chinese New Year, it will be impossible to deliver that quickly.
Naoko Nakamura: I take it your price includes insurance?
Li Bai: Actually, no. Usually, you’d be responsible for that. But if the order was really large, that would be negotiable, I’m sure.
Naoko Nakamura: What about payment?
Li Bai: To be honest, we’d prefer cash on delivery, as this is our first contract with you. If you were a regular customer, we would offer you 30 days’ credit, maybe even a little more.
Naoko Nakamura: That’s all right. I quite understand.
Li Bai: Look, how about having some lunch now, and continuing later this afternoon? Then we could meet for an evening meal. I know an excellent restaurant in Wanchai.
Naoko Nakamura: Yes, let’s continue after lunch. If I had more time, I would love to have dinner with you, but unfortunately my flight for Tokyo leaves at eight tonight, and I need to be at the airport by six.


Find all conditional sentences in the dialogue and answer the question

Which of the conditions are:

  • very likely
  • less certain or imaginary.

Guess the words

pic2|GE|Adv|L18

Complete the sentences

Writing

Read the text and find a heading for each paragraph

pic6_Business|Upper-Int|L16


Match the words from the text and their definitions


Listen to Michael Kitson talking about the consequences of free trade, and complete the gaps

I think I would argue that many economists favour free trade, and some governments see the problems with free trade, under certain circumstances. We all know that economics is based on simplified models. And sometimes those simplified models are not useful in explaining the way the real world works, or sometimes there are exceptions to those models.

Let’s take into account the standard argument for free trade — OK, that everybody gets better off, more efficiency, we can consume more goods and services. Well, that may be the case, but there may be some people who lose out. Take the very simple argument, we often have two economies with two goods, OK, we simplify and then we extend. So say we’ve got two economies with two goods. We’ve got a developed country producing computers and cloth, and we have an underdeveloped country that’s trying to produce computers and cloth. OK, and then we say, well actually with free trade you should specialize in what you’re best at, or least worst at. OK, so under that situation we say, right, to the developed country, you produce computers, and sell some computers to the developing country, and in the developing country, you focus on cloth and buy the computers from a developed country and so on. That’s our standard model, OK. And we can see that there’s efficiency gains, ultimately we should be able to get, consume more computers and cloth through that process.

But let’s think what happens there. I’m working in a cloth factory in a developed country. We move from going from no trade to free trade. My country specializes just in computers. What’s going to happen, I’m going to lose my job. OK. Now that may be a big concern, governments may be concerned about workers losing jobs in certain sectors. Now we could argue in theory I just need to reallocate my job and become working in computing. It may be very difficult for me to do that. I may be in a wrong part of the country, I may not have the right skills and so on. Basically what happens with free trade is that many many people gain and a few people may lose and they may lose big time, and if we’re concerned about those people we may want to have some transition process, we may be concerned about unfettered free trade.

  • Warm-up
  • Views on international markets
  • Free trade. Part 1
  • Free trade. Part 2
  • Free trade. Part 3
  • Open and protected markets
  • Buyers and suppliers
  • Conditionals I and II
  • The dialogue
  • Guess the words
  • Conditional sentences practice
  • International meetings
  • Free trade consequences
  • Guess the words
  • Conditional sentences practice
  • International meetings
  • Free trade consequences
  • Free trade exceptions
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