Vocabulary Notes to Text 4.7.1.2

1. to dispose of — распорядиться

2. to deem — считать, полагать

3. to overrule — аннулировать, отклонять

4.7.1.3. Read the text “Tariffs in International Trade” for five minutes and enumerate the functions

that tariffs perform (orally).

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3 Мировая экономика

(a)То reduce the overall level of imports by making them more expensive relative to their homeproduced

substitutes, with the aim of eliminating a balance of payments deficit (devaluation).

(b)To counter the practice of dumping by raising the import price of the dumped commodity to

its economic level.

(c) To retaliate against restrictive measures imposed by other countries (reciprocity).

(d)To protect a new industry until it is sufficiently well-established to compete with the more

developed industries of other countries (infant-industry argument).

(e)To protect “key” industries, such as agriculture, without which the economy would be vulnerable

in time of war.

For instance, tariffs were preferential for members compared with nonmembers of the Common

Market. It was an accepted principle under the most-favored-nation clause of the General Agreement

on Tariffs and Trade that tariffs had to be nondiscriminating, and any concessions agreed between

two or more countries had to be automatically extended to all. It had been accepted, however,

that this principle might be waived in the interests of the developing countries. Significant progress

had been made through the GATT (now WTO) in the reduction of tariff levels by means of a series of

negotiations, among which the Uruguay round of trade negotiations was the most prominent.

Vocabulary Notes to Text 4.7.1.3

1. to levy on an ad valorem basis... — взимать с объявленной цены, взятой за основу...

2. to retaliate — применять репрессалии

3. vulnerable — уязвимый

4. concessions — уступки

5. to waive — отказывать(ся) от права (от требования)

4.7.1.4. Read the additional text '‘Arguments for Protective Measures” for six minutes and think

about its contents. Give the annotation of it in Russian.

Arguments fo r Protective Measures

Let us consider the reasons the protectionists hold for justifying trade barriers. The main one is an

argument in support of the retention of a protective import tariff to promote the creation of a local

industry. It is held to apply in cases where an industry cannot operate at an optimum least-cost output

until it has reached a sufficient size to obtain significant economies of scale. A new industry, therefore,

in, say, a developing country, will always be in a competitively vulnerable position vis-a-vis an

established industry in an advanced country. It follows that the stage of growth at which the industry

(or country) can “take off” (Rostow, W. W.) industrially will be postponed indefinitely. The argument

concludes that protection is necessary until the industry has reached its optimum size.

The second argument is that countries or firms which create new industries or products first may

establish a competitive advantage that makes it hard or impossible for other countries to follow in the

same area. The advantage is most likely to prevail in sectors of large economies of scale, and especially