lesson 2
Why Do We Trade With Other Countries ?
Economic activity began with the caveman, who was economically self-sufficient . He did his own hunting, found his own shelter, and provided for his own needs. As primitive populations grew and developed, the principle of division of labor evolved. One person was more able to perform certain activities than another, and therefore each person concentrated on what he did best. While one hunted, another fished. The hunter then traded his surplus to the fisherman and thus each benefitted from the variety of diet.
In today's complex economic world, neither individuals nor nations are self-sufficient. Nations have utilized different economic recources; people have developed different skills. This is the foundation of world trade and economic activity. As a result of this trade and activity, international finance and banking have evolved.
For example, the United States is a major consumer of coffee, yet it does not have the climate to grow any of its own. Consequently, the United States must import coffee from countries ( such as Brazil, Colombia, and Guatemala ) that grow coffee efficiently. On the other hand, the United States has large industrial plants capable of producing a variety of goods, such as chemicals and airplanes, which can be sold to nations that need them. If nations traded item for item, such as one automobile for 10,000 bags of coffee, foreign trade would be extremetly cumbersome and restrictive. But instead of barter, which is the trade of goods without an exchange of money, the United States receives money in payment for what it sells. It pays for Brazilian coffee with dollars, which Brazil can then use to buy wool from Australia, which in turn can buy textiles form Great Britain, which can then buy tobacco from the United States.
Foreign trade, the exchange of goods between nations, takes place for many reasons. The first, as mentioned above, is that no nations has all of the commodities that it needs. Raw materials are scattered around the world. Large deposits of copper are mined in Peru and Zaire, diamonds are mined in South Africa, and petroleum is recovered in the Middle East. Countries that do not have the resources within their own boundaries must buy from countries that export them.
Foreign trade also occurs because a country often does not have enough of a particular item to meet its needs. Although the United States is a major producer of sugar, it consumes more than it can produce internally and thus must import sugar.
Third, one nation can sell some items at a lower cost than other countries. Japan has been able to export large quantities of radios and television sets because it can produce them more efficiently than other countries. It is cheaper for the United States to buy these from Japan than to produce them domestically. According to economic theory, Japan should produce and export those items from which it derives a comparative advantage. It should also buy
and import what it needs from those countries that have a comparative advantage in the desired items.
Finally, foreign trade takes place because of innovation or style. Even though the United States produces more automobiles than any other county, it still imports large quantities of autos from Germany, Japan, and Sweden, primarily because there is a market for them in the United States.
For most nations, export and import are the most important international avtivity. When nations export more than they import, they are said to have a favorable balance of trade. When they import more than they export , an unfavorable balance of trade exists. Nations try to maintain a favorable balance of trade, which assures them of the means to buy necessary imports. Some nations, such as Great Britain in the nineteenth century, based their entire ecnomies on the concept of importing raw materials, processing them into manufactured goods, and then exporting the finished goods. The subsequent profits enabled these nations to import the food they needed.
In addition to visible trade, which involves the import and export of goods and merchandise, there is also invisible trade, which involves the exchange of services between nations.
As an example of invisible trade, Brazilian coffee is usually transported by ocean vessels because these steamships are the cheapest method of transportation. Nations such as Greece and Norway have large maritime fleets, which can provide this transportation service. When an exporter arranges for this kind of transportation, he rents space in the cargo compartment of a ship for one voyage.
The prudent exporter purchases insurance for his cargo’s voyage. While at sea, a cargo is vulnerable to many dangers. The most obvious danger is that the ship may sink. In this event, the exporter who has purchaseed insurance is reimbursed. Otherwise, he may suffer a complete lost. There is also the danger of damage to the cargo from a collapsed or leaky pipe, which could diminish the cargo’s value. Thus, insurance is another service in which some nations specialize. Great Britain, because of the development of Lloyd’s of London, is a leading exporter of this service, earning fees for insuring other nations’ foreign trade.
Some nations possess little in the way of exportable commodities or manufactured goods, but they have a mild and sunny climate. During the winter, the Bahamas attract large numbers of tourists, particularly from the northestern United States, who spent money for hotel accommodations, meals, taxis, and so on. Tourism, therefore, is another form of invisible trade.
In the past twenty-five years, a tremendous demand has grown for the construction of large-scale development projects around the world, including dams, highway networks, and so on. The technical skills to build these projects are purchaseed when a nation hires engineers and construction supervisors, usually from another country. The commission
s and salaries that are paid to these people represent another form of invisible trade.
The United States has been described as a nation of immigrants. Many Americans send money back to families and relatives in the “old countries”. In the past fifteen years, millions of workers from the countries of southern Europe have gone to work in Germany, Switzerland, France, the Benelux nations, and Scandinavia. The workers send money home to support their families. These are called immigrant remittances. They are an extremely important kind of invisible trade for some countries, both as imports and exports.
Invisible trade can be as important to some nations as the export of raw materials or commodities is to others. In both cases, the nations earn money to buy necessities.
Notes:
1. economic resouces 经济资源
2. economic activity 经济活动
3. finance 金融，筹措资金
4. banking 银行业务
5. favorable balance of trade ( 或favorable trade balance ) 贸易顺差，出超
6. unfavorable balance of trade (unfavorable trade balance) 贸易逆差，入超
7. manufactured goods ( manufactured articles, manufactured products) 制成品
8. finished goods 制成品，产成品
9. raw material 原材料
10. visible trade有形贸易
11. invisible trade 无形贸易
12. exchange of service 劳务交换
13. cargo 船货，货物
14. development project 发展项目
15. Lloyd’s 劳埃德保险社
16. immigrant remittance 侨汇
17. commission 手续费，佣金
18. of one’s own 属于某人自己的
19. item for item 以物换物
20. assure sb. Of 向某人保证
21. be vulnerable to 易受
22. in this event 如果这种情况发生
23. in the way of 关于，有关
Translate：
1. 劳务分工的原则principle of division of labor
2. 进口大量收音机和电视机 import large quantities of radios and television sets
3. 遭受全部损失 suffer a complete lost
4. 原始人口 primitive population
5. 船只的密封货舱 cargo compartment of a ship
6. 大规模的开发工程 large-scale development projects
7. 将原料加工为成品 processing raw materials into manufactured goods
8. 建设管理人员 construction supervisor
9. 分散在全世界 scatter around the world
10. 利用经济资源 utilize economic resouces
Translate sentences:
1. 我们的对外贸易政策是一贯的。
We stick to consistent policy in our foreign trade.
2. 我们坚持平等互利、互通有无的原则。
We insist on the priciple of equality and mutual benefit.
3. 我们在外贸工作中采取一些灵活做法。
We have adopted a flexible policy in our foreign trade work.
4.
我们很想了解这方面的情况，您能具体谈谈吗？
We would like very much to know about this approach. Could you tell us more about it ?
5. 比如说：分期付款，我们现在可以采用了。
For example, we have adopted payment by instalment.
6. 这样一来，对双方都有利。
It will benefit us both then.
7. 我们的方针是自利更生为主，资金积累是社会主义性质的。
Our policy is to rely on our own efforts and the accumulation of funds is socialistic.
8. 我们坚持的原则是，我国进口必须根据我国的支付能力。
Then principle that we are insisting on is to consider our ability to pay when importing goods.
9. 如果需要的话，我们愿意按最优惠的利率向您们提供贷款。
If there is any need, we’d like to supply you with a loan at the favorable rate.
10. 我们在自利更生的基础上，利用外资引进先进技术的方针是不变的。
The principle introducing advanced technology with foreign capital will remain unchanged on the basis of self-reliance.