International Trade Simulation
Gina Caraiman
University of Phoenix
ECO 360
Kimberly Swaney
March 5, 2007
International Trade Simulation
Introduction
This simulation will provide reasons for international trade and help me determine which
countries to trade with, what products to import or export. Also, help with determining
when to impose trade restrictions like: tariffs and quotas, and when to negotiate trade
agreements. Overall, the story in this simulation has cast me in the role of the Trade
Representative of Rodamia, where my office develops and coordinates international trade
and investment policies, and leads negotiations with other countries on above mentioned
subjects.
I am the presidents Chief Trade Advisor, negotiator and spokesperson on international
trade and investment issues. The key players in this scenario are: Michael Jacobs is the
president of Rodamia, Lisa Drake is the chairman for the Trade Commission of Rodamia,
and Walter Barnes is the Deputy Trade Representative.
Rodamia is a large country in comparison to its neighbors, in terms of population, area and
level of economic development. About four percent of Rodamias Gross Domestic Product
comes from agriculture, mainly: corn, wheat, cotton, diary and poultry products; 30% from
industry and 66% from services. Rodamia is surrounded by three countries, (Alfazia,
Uthania, Suntize), and is considering trading with these countries because this will lead to
greater benefits. Trading will enable Rodamia to provide a more diverse price and quality
of products to its consumers. Domestic producers can expand their markets to other
countries and Rodamia capital gets new avenues of investments. All these aspects will add
to making the economy more sparkling and the country richer.
Scenario one: The president has asked me to determine if there are opportunities for trade
with Alfazia, Uthania, or Suntize. He has asked me to identify commodities or industries to
which tax incentives could be given to encourage production and exports. The research by
the Trade Commission has identified certain commodities for trade with these countries.
Scenario two: President of Rodamia has asked me to determine whether to levy an
anti-dumping tariff or to impose a quota restriction on imports from Suntize; after the
Trade Representative office determined a dumping margin of 25% to equate the price of
watches imported from Suntize to the market value of watches.
Scenario three: I need to asses whether an ad valorem tariff should be imposed on corn
imported from Uthania and Alfazia for a short time. If a tariff needs to be imposed, then I
need to determine the tariff level so the price differential between imported corn and
