Voluntary trade benefits both buyers and sellers in Southwest Asia. Countries specialize in producing certain goods they have a comparative advantage in, and then trade for goods they need but do not produce. For example, Saudi Arabia and other Middle Eastern countries export large amounts of oil, which the United States and others import. The U.S. then exports foods and materials to the Middle East in return. While trade allows countries to benefit, some countries erect trade barriers like tariffs and quotas to restrict imports and protect domestic industries.

1. I can explain how voluntary trade benefits buyers and
sellers in Southwest Asia.

2. What’s Your Specialty? (A)
 If one country has something another country
wants, the opportunities for trade begin to
unfold.
 Specialization encourages trade among countries
because no country produces everything it needs.
 The country selling the product makes a profit,
and the country buying the product gets what it
needs.

3. What’s Your Specialty? (B)
 In the Middle East, if a country has oil to export,
there are plenty of customers to buy it.
 Saudi Arabia, Iran, Iraq, and Kuwait export
millions of barrels of oil every day.
 The United States imports oil from the Middle
East because it does not have enough for the
country’s needs.
 In turn, the U.S. exports food, medicine, and raw
materials to the Middle East.

4. What’s Your Specialty? (C)
 Having a more diversified economy, Turkey
exports coal, textiles, and some food to
European countries.
 Those countries then export needed
transportation materials to Turkey.
 Israel imports rough diamonds and exports
the finished product: cut and polished
diamonds.

5. Trade Barriers
 Countries sometimes set up trade barriers to
restrict trade because they want to produce and
sell their own goods. Trade barriers include:
 Tariffs
 Quotas
 Embargoes

6. Tariffs
 Tariffs are taxes on imported goods which cause the
consumer to pay a higher price for an imported item.
 Demand is then increased for the lower-priced item
produced at home.
 In 2008, Saudi Arabia and Egypt lowered tariffs on
food imports to help their citizens cope with rapidly
rising food prices.

7. Quotas
 Quotas are restrictions on the amount of a good
that can be imported into a country.
 Quotas can create shortages that cause prices to
rise.

8. Embargos
 Embargos forbid trade with another country.
 After the September 11th, 2001 terrorist attacks on
the United States, the United Nations placed an
arms embargo on Afghanistan.
 Members of the UN could not sell weapons to
Afghanistan, because of the violent group in
charge of the government.

9. OPEC (A)
 Organization of Petroleum Exporting Countries
 Created in 1960 by 5 oil rich countries (Iran, Iraq,
Saudi Arabia, and Venezuela)
 OPEC states it has two purposes:
 to coordinate and unify petroleum prices in order to
promote stability in the world market
 And ensure a regular supply of petroleum to other
countries
 OPEC sets the price and amount of oil produced by
its members
 OPEC has a lot of control over
gas prices

10. OPEC (B)
 Before 1960, oil production was greater than
demand, so oil prices were lower
 After OPEC was formed, demand for oil increased,
so oil prices rose
 OPEC currently has 12 members
 OPEC has a lot of power and has used oil as a
political tactic
 In 1973, OPEC stopped exporting oil to countries
that supported Israel in the Arab-Israeli War of
1973-This caused gasoline shortages in the U.S. and
many other countries

11. Currency Exchange
 Currency is the type of money a country uses
 Because different countries have different
currencies, international trade is needed.
 International trade requires a system for
exchanging currency between nations.
 Foreign Exchange-money from one country must
be converted into the currency of that country to
pay for goods in that country.