What is the primary difference between a Tariff and a Quota?

A tariff is a financial tax placed on imported goods to increase their price, while a quota is a physical limit on the quantity of goods allowed into a country. Tariffs generate government revenue, whereas quotas restrict supply directly.

How do Primary Commodities differ from Secondary Commodities in terms of trade value?

Primary commodities are raw materials (e.g., iron ore) with low value-added, often leading to lower profit margins. Secondary commodities are manufactured goods (e.g., cars) with high value-added, typically resulting in higher trade value and economic growth.

What is the distinction between Trade Volume and Trade Value?

Trade volume measures the physical amount or quantity of goods and services exchanged. Trade value measures the total monetary worth (e.g., in USD) of those goods and services in the market.

Why is it a mistake to equate Foreign Direct Investment (FDI) with general trade?

Trade involves the cross-border exchange of goods and services for payment. FDI involves a long-term capital investment to establish or acquire business operations (like factories) in another country, representing ownership rather than just a transaction.

What is the misconception regarding 'Dumping'?

Dumping is not just selling goods abroad; it is specifically selling them at a price lower than the cost of production or the domestic market price. It is often a predatory strategy to drive out local competitors in the target country.

Does a trade bloc only affect the countries inside the group?

No, while it reduces barriers for members, it often maintains or creates barriers for non-members. This can lead to 'trade diversion,' where trade shifts from a low-cost non-member to a higher-cost member because of the tariff difference.

Define 'Special and Differential Treatment' (SDT).

SDT refers to specific provisions within WTO agreements that give developing countries special rights. These include longer timeframes for implementing agreements and preferential access to developed markets to help bridge the development gap.

What is an 'Emerging Market Economy' (EME)?

An EME is a nation that is transitioning from a developing economy to a developed one. These countries, such as India or Brazil, typically have high economic growth rates and increasing integration into global financial markets.

What does the 'Everything But Arms' (EBA) initiative provide?

EBA is an EU policy that allows the world's Least Developed Economies (LDEs) to export all products to the EU without any tariffs or quotas, with the sole exception of weapons and ammunition.

What is the 'Global Shift' in the context of international trade?

Global shift refers to the large-scale relocation of industrial and manufacturing activities from Highly Developed Economies (HDEs) to Emerging Market Economies (EMEs) and LDEs. This is driven by globalization, lower costs, and improved transport.

Key Terms: International Trade & Access to Markets | AQA A-Level Geography

Global Systems & Governance

Key Terms: International Trade & Access to Markets

Summary

International trade is the exchange of goods, services, and capital across borders, governed by complex relationships between nations of varying development levels. Access to global markets is often mediated by trade barriers, international agreements, and the strategic formation of trade blocs.

1. Core Concepts of Trade Flow

Exports and Imports: Exports are goods or services produced domestically and sold to foreign markets, while imports are those purchased from abroad. The balance between these two determines a nation's trade position.
Trade Volume vs. Value: Trade volume refers to the physical quantity of goods and services exchanged, whereas trade value represents the total monetary worth of those exchanges in global markets.
Foreign Direct Investment (FDI): This involves a company or individual from one country making a physical investment into business interests in another country, such as building a factory or acquiring a local firm.

Diagram showing the flow of primary commodities from Less Developed Economies (LDE) to Highly Developed Economies (HDE), and the flow of secondary goods and FDI in the opposite direction.

2. Economic Classifications & Global Shift

Development Tiers: Nations are categorized as Highly Developed Economies (HDEs), Emerging Market Economies (EMEs), or Less Developed Economies (LDEs) based on income, infrastructure, and industrialization.
Global Shift: This describes the movement of manufacturing and industrial activity from HDEs to EMEs and LDEs, often driven by lower labor costs and expanding markets.
Commodity Types: LDEs typically export Primary Commodities (raw materials like minerals or crops), while HDEs and EMEs export Secondary Commodities (manufactured goods with added value).

3. Trade Barriers & Protectionism

Tariffs: A tax imposed on imported goods, designed to make foreign products more expensive and protect domestic industries from international competition.
Quotas: A physical limit on the quantity of a specific product that can be imported or exported during a set period.
Dumping: The practice of selling excess goods in a foreign market at prices lower than the cost of production or the domestic price, often to eliminate competition.

4. Market Access Mechanisms

5. Key Distinctions

6. Exam Strategy & Tips

7. Common Pitfalls & Misconceptions