CH24Mindmap

Ch24 International Trade โ€“ Gavin Duffy Business

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๐ŸŒ Key Terms
Open Economy
A country that engages in international trade โ€” both exporting and importing. Ireland is highly open, heavily reliant on exports.
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Trading Bloc
A group of countries allowing free trade between them โ€” no tariffs on goods traded among members. E.g. EU, NAFTA.
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Free Trade Area
Members trade freely with reduced or no tariffs between them โ€” but each sets own tariffs on non-members.
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Customs Union
Free trade internally AND common tariffs on non-members as a bloc. E.g. EU customs union.
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Protectionism
Government actions to protect home industries from foreign competition using barriers to trade. Aims: reduce imports, protect jobs, improve BOP.
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Deregulation
Removal of government barriers to allow firms to enter a market freely โ€” increases competition, reduces prices.
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๐Ÿ“ฆ Elements of Trade
Visible Exports
Purchase of Irish physical goods by foreign customers โ€” money flows INTO Ireland. E.g. Irish beef sold to UK.
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Invisible Exports
Purchase of an Irish service by foreign customers โ€” money flows INTO Ireland. E.g. American tourists spending in Ireland.
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Visible Imports
Purchase of a foreign physical good by someone in Ireland โ€” money flows OUT OF Ireland. E.g. wine from France.
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Invisible Imports
Purchase of a foreign service by someone in Ireland โ€” money flows OUT OF Ireland. E.g. Irish people holidaying in Spain.
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Import Substitution
Irish consumers buy Irish goods instead of foreign ones โ€” reduces imports, improves Balance of Payments.
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โš–๏ธ Balance of Trade & Payments
Balance of Trade
Visible Exports โˆ’ Visible Imports
Surplus = VE > VI โœ“ | Deficit = VE < VI โœ—
โš ๏ธ If VI not given: VI = Total Imports โˆ’ Invisible Imports
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Balance of Payments
Total Exports โˆ’ Total Imports
(visible + invisible for each)
Surplus = TE > TI โœ“ | Deficit = TE < TI โœ—
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๐Ÿšง Barriers to Free Trade
Tariff
A TAX on an import โ€” raises price, discourages consumption. E.g. EU tariff on US steel.
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Embargo
A TOTAL BAN on importing certain goods/from a country. E.g. EU embargo on UK beef during BSE.
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Quota
A PHYSICAL LIMIT on the number of units that can be imported. E.g. EU quota on Chinese textiles.
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Subsidy
GRANTS to domestic firms to reduce costs โ€” makes home goods more competitive vs imports. E.g. EU CAP farm subsidies.
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Administrative Regulations
Customs delays and excessive paperwork to slow imports โ€” makes foreign goods less attractive. E.g. post-Brexit border checks.
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๐Ÿ“ˆ Trends Affecting Ireland
Currency Fluctuations
Weaker trade partner currencies can lower demand for Irish goods โ€” Irish exports become more expensive.
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MNCs in Ireland
Ireland's 12.5% corp tax and skilled workforce attracted Google, Meta, Pfizer โ€” jobs and export income.
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Brexit / Protectionism
Brexit introduced customs checks, duties and delays for UK trade โ€” Ireland's largest trading partner.
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Emerging Markets
China, India, Brazil โ€” new export opportunities AND new competition for Irish businesses.
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Newer EU States
Czech Republic, Hungary, Slovakia โ€” lower wages create competitive pressure on Irish manufacturing.
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๐Ÿงฎ ToolBalance of Trade & Balance of Payments Calculatorโ–ผ
Enter the figures given in the question. Leave Visible Imports blank if you need to calculate it.
Enter figures (โ‚ฌbn)
2025 Q3(C)Illustrate four barriers: Embargo, Quota, Subsidy, Tariff. (20)โ–ผ
Illustrate the following barriers to free trade: Embargo | Quota | Subsidy | Tariff (20 marks โ€” 4ร—5)
โœ๏ธ Suggested Answer
Tariff: A TAX on an import โ€” raises price, discourages consumption. E.g. EU tariffs on US steel make European steel more competitive.
Embargo: A TOTAL BAN on importing certain goods/from a country. E.g. EU embargoed UK beef during BSE crisis.
Quota: A PHYSICAL LIMIT on units that can be imported. E.g. EU quota on Chinese textiles blocking millions of items.
Subsidy: GRANTS to domestic firms to reduce costs. E.g. EU CAP subsidies help European farmers compete with cheaper non-EU imports.
๐Ÿ“Œ Illustrate = definition + example. Examiners look for precise words: "TAX" for tariff, "TOTAL BAN" for embargo, "PHYSICAL LIMIT" for quota, "GRANTS/PAYMENTS" for subsidy.
2025 Short Q9Import substitution โ€” explain + impact on BOP. (10)โ–ผ
(i) Explain, using an example, the term import substitution.
(ii) Outline the impact an increase in import substitution would have on the Balance of Payments.
โœ๏ธ Suggested Answer
(i) Import substitution: When Irish consumers or businesses buy Irish-made goods and services instead of foreign ones. E.g. a supermarket stocking Kerrygold butter instead of imported butter brands.
(ii) Impact on BOP: An increase in import substitution means fewer imports โ€” less money leaving the economy. This improves the Balance of Payments by helping achieve a surplus or reducing an existing deficit.
๐Ÿ“Œ The BOP impact must state the DIRECTION. "Reduces imports โ†’ improves BOP" is what earns the marks.
2024 Q3(A)Explain Balance of Payments + calculate. (20)โ–ผ
Explain the term Balance of Payments and calculate it using given data. State surplus or deficit. (20 marks)
โœ๏ธ Definition
Balance of Payments: The difference between total exports (visible + invisible) and total imports (visible + invisible). If total exports exceed total imports, it is a surplus; if total imports exceed total exports, it is a deficit.
โœ๏ธ Calculation Method
Step 1: If Visible Imports not given: VI = Total Imports โˆ’ Invisible Imports
Step 2: Balance of Trade = Visible Exports โˆ’ Visible Imports
Step 3: Balance of Payments = Total Exports โˆ’ Total Imports
Step 4: State SURPLUS or DEFICIT for each (worth a separate mark)
๐Ÿ“Œ Always show workings and always state surplus/deficit. The calculation itself is straightforward โ€” marks are lost by forgetting to derive Visible Imports or failing to label the result.
2023 Short Q3Invisible exports + calculate BOT & BOP. (10)โ–ผ
(a) Explain invisible exports. (4m)
(b) Calculate: VE โ‚ฌ70bn | II โ‚ฌ40bn | TE โ‚ฌ100bn | TI โ‚ฌ90bn
โœ๏ธ Suggested Answer
Invisible exports: Services sold by Irish businesses to foreign customers โ€” money enters Ireland. E.g. American tourists spending in Irish hotels.
Step 1: VI = TI โˆ’ II = โ‚ฌ90bn โˆ’ โ‚ฌ40bn = โ‚ฌ50bn
BOT = VE โˆ’ VI = โ‚ฌ70bn โˆ’ โ‚ฌ50bn = โ‚ฌ20bn SURPLUS โœ“
BOP = TE โˆ’ TI = โ‚ฌ100bn โˆ’ โ‚ฌ90bn = โ‚ฌ10bn SURPLUS โœ“
๐Ÿ“Œ Most common error: Not deriving Visible Imports from Total Imports โˆ’ Invisible Imports. This "step zero" is needed when VI isn't given directly.
2021 Q3(A)Barriers to free trade with examples. (20)โ–ผ
Outline, using examples, the barriers to free trade used by some countries. (20 marks โ€” 2ร—7 + 1ร—6)
โœ๏ธ Three barriers fully developed
Tariff: A tax on imports โ€” makes imports more expensive, less competitive. E.g. tariff on NZ lamb makes Irish lamb more competitive domestically.
Quota: A physical limit on units that may be imported. E.g. EU quota on Chinese textiles blocking millions of clothing items.
Subsidy: Grants to domestic firms to reduce costs โ€” price advantage over imports. E.g. EU CAP subsidies protect European agriculture.
๐Ÿ“Œ Each barrier: name โ†’ define โ†’ example with context. Real EU/Irish examples earn more than generic ones.
2016 Q3(C) / 2018 Q3(C)International trade terms: Open Economy, Trading Bloc, Protectionism, Deregulation. (20)โ–ผ
Explain the following international trade terms: Open economy | Trading bloc | Protectionism | Deregulation (20 marks)
โœ๏ธ Suggested Answer
Open Economy: An economy where people and businesses can freely trade internationally โ€” importing, exporting and accessing world financial markets. Ireland is highly open.
Trading Bloc: A group of countries forming a free trade area or common market โ€” removing tariffs/quotas between members. E.g. EU, NAFTA.
Protectionism: Government actions to restrict international trade โ€” protecting native businesses and jobs from foreign competition. E.g. tariffs, quotas, embargoes.
Deregulation: Removal of trade barriers โ€” allowing free trade and easier market entry. Increases competition, can lower prices.
๐Ÿ“Œ Trading Bloc always needs an example (EU/NAFTA). Protectionism should mention specific barriers.
๐Ÿ”ฅ HOT Short Q Terms โ€” Trading Bloc, Open Economy, Protectionism
The 2026 workpack lists short terms as a must-know. These terms appear almost every year as short questions: 2025 SQ9 (import substitution), 2024 SQ6 (embargo vs quota), 2023 SQ3 (invisible exports + calc), 2022 SQ8/10 (protectionism, visible imports). Know all definitions precisely โ€” open economy, trading bloc, free trade area, customs union, protectionism, deregulation, and all four visible/invisible export/import definitions.
Short Q terms appear almost every year. Guaranteed content for 2026.
๐Ÿ”ฅ HOT Calculation Q โ€” Balance of Trade & Balance of Payments
The workpack flags this as "Calculation Q NB" (nota bene = important). Calculation questions appeared in 2024 Q3(A), 2023 SQ3, 2020 Q3(A), 2019 SQ7, 2017 Q3(A), 2016 SQ7. This appears almost annually. The key skill is deriving Visible Imports when not given: VI = Total Imports โˆ’ Invisible Imports. Always show workings and state surplus/deficit.
Calculation Q: 2024, 2023, 2020, 2019, 2017, 2016. Near-annual appearance.
โšก WARM Barriers to Free Trade โ€” Definitions with Examples
Barriers were asked in 2025 Q3(C) (illustrate four barriers) and 2021 Q3(A) (outline with examples). With 2025 covering this as a full question, a repeat long Q is less likely in 2026 โ€” but individual barriers appear in short questions regularly (2024 SQ6 embargo vs quota). Know all five: tariff (TAX), embargo (TOTAL BAN), quota (PHYSICAL LIMIT), subsidy (GRANTS), administrative regulations (PAPERWORK).
Last long Q: 2025. Individual barriers appear in short Qs annually.
๐Ÿ“… DUE Trends / Challenges for Irish Exporters
The challenges facing Irish exporters (globalisation, currency fluctuations, Brexit, emerging markets, language/cultural barriers) have not been asked as a standalone question recently. The workpack includes this content. A question like "Analyse how changes in the international economy are impacting Irish businesses" is overdue โ€” it was part of 2021 Q3(B) but hasn't been the sole focus of a question in years.
Challenges/trends: integrated into other Qs but not standalone recently.
โš ๏ธ No ABQ in Chapter 24
Ch24 is in Unit 7. The ABQ technique does NOT apply to Chapters 19โ€“26.
๐Ÿงฎ The "Step Zero" Calculation Trap
The most common calculation error in Ch24 is forgetting to derive Visible Imports when they are not given directly:
If Visible Imports are NOT given:
Visible Imports = Total Imports โˆ’ Invisible Imports

Then:
Balance of Trade = Visible Exports โˆ’ Visible Imports
Balance of Payments = Total Exports โˆ’ Total Imports

Always state SURPLUS or DEFICIT โ€” it's worth a separate mark.
Use the interactive calculator in the Past Qs tab to practice.
๐ŸŽฏ Barrier Definitions โ€” The Precise Words
Examiners look for specific trigger words in each barrier definition:
Tariff = "TAX on an import"
Embargo = "TOTAL BAN on importing"
Quota = "PHYSICAL LIMIT on number of units"
Subsidy = "GRANTS/PAYMENTS to domestic firms"
Admin Regs = "CUSTOMS DELAYS and EXCESSIVE PAPERWORK"
Using these precise words earns the state mark. A vague answer like "makes imports harder" will not.
๐Ÿ’ฑ Visible vs Invisible โ€” The Money Flow Rule
EXPORTS = Money flows INTO Ireland (goods/services SOLD to foreigners)
IMPORTS = Money flows OUT OF Ireland (goods/services BOUGHT from foreigners)

VISIBLE = Physical GOODS (you can touch them)
INVISIBLE = SERVICES (you can't touch them)
Combine: Visible Export = Irish GOOD sold abroad (money in). Invisible Import = foreign SERVICE bought by Irish person (money out).
๐Ÿ”‘ Keywords That Earn the Marks
open economytrading blocfree trade areacustoms unionprotectionismderegulationvisible exportsinvisible exportsvisible importsinvisible importsBalance of TradeBalance of Paymentssurplusdeficittariffembargoquotasubsidyadministrative regulationsimport substitutionCAPBrexitcorporation tax 12.5%