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12th Geography Chapter -8 International Trade Exercise Solution (English Medium)

EXERCISES

1. Choose the right answer from the four alternatives given below.
(i) Most of the world’s great ports are classified as:
(a) Naval Ports 
(b) Oil Ports 
(c) Comprehensive Ports
(d) Industrial Ports
Answer - (c) Comprehensive Ports
Note - They handle bulk cargos in a large volume.

(ii) Which one of the following continents has the maximum flow of global trade?
(a) Asia 
(b) North America 
(c) Europe
(d) Africa
Answer - (c) Europe
Note - Europe has achieved a strong position by having good trade strategies.

(iii) Which one of the following South American nation, is a part of OPEC?
(a) Brazil 
(b) Chile 
(c) Venezuela
(d) Peru
Answer - (c) Venezuela
Note - Venezuela is in South America and it became a member of OPEC in 1960.

(iv) In which of the following trade blocs, is India an associate member?
(a) SAFTA 
(b) OECD 
(c) ASEAN
(d) OPEC
Answer - (c) ASEAN
Note - India is a member of ASEAN in 1992.

2. Answer the following questions in about 30 words:
(i) What is the basic function of the World Trade Organisation?
Answer - 
In1948, to liberalize the world from high customs tariffs and various other types of restrictions, General Agreement for Tariffs and Trade (GATT) was formed by some countries. In 1994, it was decided by the member countries to set up a permanent institution for looking after the promotion of free and fair trade amongst nation and the GATT was transformed into the World Trade Organisation from 1st January 1995. WTO Headquarters are located in Geneva, Switzerland. 164 countries were members of WTO as on December 2016. India has been one of the founder member of WTO.

The basic function of the World Trade Organisation is -
 WTO is the only international organisation dealing with the global rules of trade between nations. It sets the rules for the global trading system and resolves disputes between its member nations. WTO also covers trade in services, such as telecommunication and banking, and others issues such as intellectual rights.

(ii) Why is it detrimental for a nation to have negative balance of payments?
Answer - Balance of trade records the volume of goods and services imported as well as exported by a country to other countries. 
If the value of imports is more than the value of a country’s exports, the country has negative or unfavourable balance of trade. If the value of exports is more than the value of imports, then the country has a positive or favourable balance of trade. Balance of trade and balance of payments have serious implications for a country’s economy. A negative balance would mean that the country spends more on buying goods than it can earn by selling its goods. This would ultimately lead to exhaustion of its financial reserves.

(iii) What benefits do nations get by forming trading blocs?
Answer - Regional Trade Blocs
have come up in order to encourage trade between countries with geographical proximity, similarity and complementarities in trading items and to curb restrictions on trade of the developing world. Today, 120 regional trade blocs generate 52 per cent of the world trade. These trading blocs developed as a response to the failure of the global organisations to speed up intra-regional trade.
Though, these regional blocs remove trade tariffs within the member nations and encourage free trade, in the future it could get increasingly difficult for free trade to take place between different trading blocs.

3. Answer the following questions in not more than 150 words:
(i) How are ports helpful for trade? Give a classification of ports on the basis of their location.
Answer - 
Ports are the chief gateway for international trade. They play an important role in trade.
• Cargoes and travelers move from one part to another part of the world through these ports.
• Ports provide facilities of docking, loading, and unloading of the cargo.

Types of the port on the basis of location-

Inland Ports-
a. These ports are located away from the seacoast.
b. They are linked to the sea through a river or a canal.
c. Flat bottom ships or barges can access these ports easily.
d. For example, Manchester is linked with a canal; Memphis is located on the river Mississippi; Rhine has several ports like Mannheim and Duisburg; and Kolkata is located on the river Hoogli, a branch of the river Ganga.

Out Ports-
a. These are deep water ports built away from the actual ports.
b. These serve the parent ports by receiving those ships which are unable to approach them due to their large size.
c. Athens and its outport Piraeus in Greece.

(ii) How do nations gain from International Trade?
Answer - International trade is the exchange of goods and services among countries across national boundaries. Countries cannot produce themselves and for that, they need to trade. They can purchase at a lower price.

• International trade is the result of specialization in production.
• If different countries practice specialization and division of labor in the production of commodities then international trade benefits the world economy.
• Each kind of specialization can give rise to trade.
• Thus, international trade is based on the principle of comparative advantage, transferability of goods and services and in principle, should be mutually beneficial to the trading partners.

Undertaking international trade is mutually beneficial to nations if it leads to regional specialization, higher level of production, better standard of living, worldwide availability of goods and services, equalization of prices and wages and diffusion of knowledge and culture.

International trade can prove to be detrimental to nations of it leads to dependence on other countries, uneven levels of development, exploitation, and commercial rivalry leading to wars. Global trade affects many aspects of life; it can impact everything from the environment to health and well-being of the people around the world. As countries compete to trade more, production and the use of natural resources spiral up, resources get used up faster than they can be replenished. As a result, marine life is also depleting fast, forests are being cut down and river basins sold off to private drinking water companies. Multi-national corporations trading in oil, gas mining, pharmaceuticals and agri-business keep expanding their operations at all costs creating more pollution – their mode of work does not follow the norms of sustainable development. If organizations are geared only towards profit making, and environmental and health concerns are not addressed, then it could lead to serious implications in the future.

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