What is BEP ?

Break-Even Point - BEP

1. In general, the point at which gains equal losses.

2. In options, the market price that a stock must reach for option buyers to avoid a loss if they exercise. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid.

For businesses, reaching the break-even point is the first major step towards profitability.

What is NTB (Non Tariff Barrier) ?

Non-tariff barriers to trade(NTB's) are trade barriers that restrict imports but are not in the usual form of a tariff.

In some forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs. Some common examples of NTB's are anti-dumping measures and countervailing duties, which, although they are called "non-tariff" barriers, have the effect of tariffs once they are enacted. Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use.

Some non-tariff trade barriers are expressly permitted in very limited circumstances, when they are deemed necessary to protect health, safety, or sanitation, or to protect depletable natural resources.

What is ROO ?

There are basically two sets of rules of origin for determining country of origin in the EU (and these terms may apply to other situations):

• Non-preferential Rules of Origin
• Preferential Rules of Origin

Non-preferential

Non-preferential Rules of Origin (RoO) is used to determined the country of origin for certain purposes. These purposes may be for quotas, anti-dumping, anti-circumvention, statistics or origin labelling.

The basis for the non-preferential RoO comes originates from the Kyoto-convention which states that if a product is wholly obtained or produced completely within one country the product shall be deemed having origin in that country. For products which has been produced in more than one country the product shall be determined to have origin in the country where the last substantial transformation took place.

To determine exactly what is last substantial transformation three general rules are applied: 1. change of tariff classification (on any level, even though 4-digit level is the most common 2. value added-rule (ad-valorem) 3. special processing rule, the minimum transformation is described. For instance, in the EU non-preferential Rules of Origin for T-shirts (HS6109) the origin is supposed to be in the country where the complete making-up was done.

It is important to remember that according to the non-preferential RoO a product does always have an origin and only one origin. It is however also important to remember that the non-preferential RoO may differ form country to country meaning that the same product may have different origins depending on which country's scheme is applied. For the above mentioned trade policy instrument it is always that importing country's RoO that are applied.

Preferential

What is OPEC ?

The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, intergovernmental Organization, created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The five Founding Members were later joined by nine other Members: Qatar (1961); Indonesia (1962) – suspended its membership from January 2009; Socialist Peoples Libyan Arab Jamahiriya (1962); United Arab Emirates (1967); Algeria (1969); Nigeria (1971); Ecuador (1973) – suspended its membership from December 1992-October 2007; Angola (2007) and Gabon (1975–1994). OPEC had its headquarters in Geneva, Switzerland, in the first five years of its existence. This was moved to Vienna, Austria, on September 1, 1965.

OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.

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The 1960s

These were OPEC’s formative years, with the Organization, which had started life as a group of five oil-producing, developing countries, seeking to assert its Member Countries’ legitimate rights in an international oil market dominated by the ‘Seven Sisters’ multinational companies. Activities were generally of a low-profile nature, as OPEC set out its objectives, established its Secretariat, which moved from Geneva to Vienna in 1965, adopted resolutions and engaged in negotiations with the companies. Membership grew to ten during the decade.
The 1970s

OPEC rose to international prominence during this decade, as its Member Countries took control of their domestic petroleum industries and acquired a major say in the pricing of crude oil on world markets. There were two oil pricing crises, triggered by the Arab oil embargo in 1973 and the outbreak of the Iranian Revolution in 1979, but fed by fundamental imbalances in the market; both resulted in oil prices rising steeply. The first Summit of OPEC Sovereigns and Heads of State was held in Algiers in March 1975. OPEC acquired its 11th Member, Nigeria, in 1971.
The 1980s

Prices peaked at the beginning of the decade, before beginning a dramatic decline, which culminated in a collapse in 1986 — the third oil pricing crisis. Prices rallied in the final years of the decade, without approaching the high levels of the early-1980s, as awareness grew of the need for joint action among oil producers if market stability with reasonable prices was to be achieved in the future. Environmental issues began to appear on the international agenda.
The 1990s

A fourth pricing crisis was averted at the beginning of the decade, on the outbreak of hostilities in the Middle East, when a sudden steep rise in prices on panic-stricken markets was moderated by output increases from OPEC Members. Prices then remained relatively stable until 1998, when there was a collapse, in the wake of the economic downturn in South-East Asia. Collective action by OPEC and some leading non-OPEC producers brought about a recovery. As the decade ended, there was a spate of mega-mergers among the major international oil companies in an industry that was experiencing major technological advances. For most of the 1990s, the ongoing international climate change negotiations threatened heavy decreases in future oil demand.

What is Input Output Analysis ?

Wassily Leontief won a Nobel Prize in Economics in 1973 for him explanation of the economy
using his input-output model. There are two application of the Leontief model:a closed model and an open model. A closed model deals only with the income of each industry whereas the open model finds the amount of production needed to satisfy an increase in demand. Example one will familiarize you with the terminology and what different vectors represent. Using the same vector names as in the example we run through the linear algebra. Then the technology matrix from 1992 will be used to analyze the interdependencies among the sectors. The most useful application of input-output analysis for the economist or a common broker is the ability to be able to see how the change in demand for one industry effects the entire economy. I will focus on showing that the same totalincrease of demand will have different effects on the Gross Domestic Product, when the demand is added to different industries.

What is aggregate demand ?

aggregate demand is the total demand for final goods and services in the economy (Y) at a given time and price level^[1]. It is the amount of goods and services in the economy that will be purchased at all possible price levels. ^[2]This is the demand for the gross domestic product of a country when inventory levels are static. It is often called effective demand or abbreviated as 'AD'. In a general aggregate supply-demand chart, the aggregate demand curve (AD) slopes downward (indicating that higher outputs are demanded at lower price levels)

What is WTO ?

The World Trade Organization (WTO) is an international organization designed to supervise and liberalize international trade. The WTO came into being on 1 January 1995, and is the successor to the General Agreement on Tariffs and Trade (GATT), which was created in 1947, and continued to operate for almost five decades as a de facto international organization.

WTO is The World Trade Organization deals with the rules of trade between nations at a near-global level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries' adherence to all the WTO agreements, signed by the majority of the world's trading nations and ratified in their parliaments. Most of the issues that the WTO focuses on derive from previous trade negotiations, especially from the Uruguay Round. The organization is currently working with its members on a new trade negotiation called the Doha Development Agenda (Doha round), launched in 2001.

The WTO has 153 members, which represents more than 95% of total world trade. The WTO is governed by a Ministerial Conference, which meets every two years; a General Council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the Ministerial Conference. The WTO's headquarters is in Geneva, Switzerland.

What is GDP ?

Gross Domestic Product is The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. The GDP report is released at 8:30 am EST on the last day of each quarter and reflects the previous quarter. Growth in GDP is what matters, and the U.S. GDP growth has historically averaged about 2.5-3% per year but with substantial deviations. Each initial GDP report will be revised twice before the final figure is settled upon: the "advance" report is followed by the "preliminary" report about a month later and a final report a month after that. Significant revisions to the advance number can cause additional ripples through the markets. The GDP numbers are reported in two forms: current dollar and constant dollar. Current dollar GDP is calculated using today's dollars and makes comparisons between time periods difficult because of the effects of inflation. Constant dollar GDP solves this problem by converting the current information into some standard era dollar, such as 1997 dollars. This process factors out the effects of inflation and allows easy comparisons between periods. It is important to differentiate Gross Domestic Product from Gross National Product (GNP). GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer's nationality. GNP doesn't include goods and services produced by foreign producers, but does include goods and services produced by U.S. firms operating in foreign countries.

What is CEPT ?

Common Effective Preferential Tariff (CEPT) is cooperative arrangement among ASEAN Member States to reduce intra-regional tariffs and remove non-tariff barriers over a 10 year period commencing 1 January 1993. Objective of the Scheme is to reduce tariffs on all manufactured goods to 0-5% by the year 2003 for the original six member states, Malaysia, Singapore, Brunei, Thailand, Philippines and Indonesia.
The new members of ASEAN, namely Vietnam, Lao PDR, Myanmar and Cambodia have been given the same 10 year flexibility to reduce tariffs from the time of their membership of ASEAN;

• Vietnam will reduce tariffs to 0-5% by 2006
  
• Laos PDR and Myanmar by 2008
  
• Cambodia by 2010
  

In 2003 for the original six member states, a total of 98.8% of tariff lines are already in the inclusion list for tariff reduction, out of which 99.55%have now duties between 0-5%.

What is AFTA ?

The Asean Free Trade Area (AFTA) was established in 1992. AFTA is a collective effort by ASEAN member countries to reduce/eliminate tariffs on intra-ASEAN trade. The purpose was to develop greater trade and industrial linkages among ASEAN member countries. With a combined population of 513 million people, the establishment of the Free Trade Area among ASEAN, offers vast potential for greater economic collaboration.

AFTA has been realised through the Common Effective Preferential Tariff (CEPT) Scheme. Under the CEPT:

• import duties among member countries will be reduced to between 0-5% by the full implementation of AFTA in 2010
  
• elimination of quantitative restrictions (import permit, quota) & other non-tariff barriers (NTBs) among ASEAN Member countries
  
• progressive transfer of products into the CEPT Scheme based on each ASEAN member's capacity and capability.
  

What is Europe Union ?

1949-1959

A peaceful Europe – the beginnings of cooperation

The European Union is set up with the aim of ending the frequent and bloody wars between neighbours, which culminated in the Second World War. As of 1950, the European Coal and Steel Community begins to unite European countries economically and politically in order to secure lasting peace. The six founders are Belgium, France, Germany, Italy, Luxembourg and the Netherlands. The 1950s are dominated by a cold war between east and west. Protests in Hungary against the Communist regime are put down by Soviet tanks in 1956; while the following year, 1957, the Soviet Union takes the lead in the space race, when it launches the first man-made space satellite, Sputnik 1. Also in 1957, the Treaty of Rome creates the European Economic Community (EEC), or ‘Common Market’.

1960-1969

The ‘Swinging Sixties’ – a period of economic growth

The 1960s sees the emergence of 'youth culture’, with groups such as The Beatles attracting huge crowds of teenage fans wherever they appear, helping to stimulate a cultural revolution and widening the generation gap. It is a good period for the economy, helped by the fact that EU countries stop charging custom duties when they trade with each other. They also agree joint control over food production, so that everybody now has enough to eat - and soon there is even surplus agricultural produce. May 1968 becomes famous for student riots in Paris, and many changes in society and behaviour become associated with the so-called ‘68 generation’.

1970-1979

A growing Community – the first Enlargement

Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising the number of member states to nine. The short, yet brutal, Arab-Israeli war of October 1973 result in an energy crisis and economic problems in Europe. The last right-wing dictatorships in Europe come to an end with the overthrow of the Salazar regime in Portugal in 1974 and the death of General Franco of Spain in 1975. The EU regional policy starts to transfer huge sums to create jobs and infrastructure in poorer areas. The European Parliament increases its influence in EU affairs and in 1979 all citizens can, for the first time, elect their members directly.

1980-1989

The changing face of Europe - the fall of the Berlin Wall

The Polish trade union, Solidarność, and its leader Lech Walesa, become household names across Europe and the world following the Gdansk shipyard strikes in the summer of 1980. In 1981, Greece becomes the 10th member of the EU and Spain and Portugal follow five years later. In 1987 the Single European Act is signed. This is a treaty which provides the basis for a vast six-year programme aimed at sorting out the problems with the free-flow of trade across EU borders and thus creates the ‘Single Market’. There is major political upheaval when, on 9 November 1989, the Berlin Wall is pulled down and the border between East and West Germany is opened for the first time in 28 years, this leads to the reunification of Germany when both East and West Germany are united in October 1990.

1990-1999

A Europe without frontiers

With the collapse of communism across central and eastern Europe, Europeans become closer neighbours. In 1993 the Single Market is completed with the the 'four freedoms' of: movement of goods, services, people and money. The 1990s is also the decade of two treaties, the ‘Maastricht’ Treaty on European Union in 1993 and the Treaty of Amsterdam in 1999. People are concerned about how to protect the environment and also how Europeans can act together when it comes to security and defence matters. In 1995 the EU gains three more new members, Austria, Finland and Sweden. A small village in Luxembourg gives its name to the ‘Schengen’ agreements that gradually allow people to travel without having their passports checked at the borders. Millions of young people study in other countries with EU support. Communication is made easier as more and more people start using mobile phones and the internet.

2000-today

A decade of further expansion

The euro is the new currency for many Europeans. 11 September 2001 becomes synonymous with the 'War on Terror' after hijacked airliners are flown into buildings in New York and Washington. EU countries begin to work much more closely together to fight crime. The political divisions between east and west Europe are finally declared healed when no fewer than 10 new countries join the EU in 2004. Many people think that it is time for Europe to have a constitution but what sort of constitution is by no means easy to agree, so the debate on the future of Europe rages on.

What is ASEAN ?

The Association of Southeast Asian Nations (ASEAN) is a multilateral organization which was created to give Southeast Asian states a forum to communicate with each other. Since the region had a long colonial past and a history of endemic warfare, there has never been much peaceful and constructive interaction between kings, presidents and other officials. In the 1950s, Vietnam, Laos and Cambodia were fighting for independence from the French and, later, the USA. This put those countries at enmity with western-leaning countries such as Thailand, Philippines and Singapore. Malaysia and Indonesia, meanwhile, had their own ‘konfrontasi’ and prickly relations (at best) existed, while Singapore and Malaysia have a lengthy history of diplomatic squabbles. A neutral forum was, therefore, a very useful development for all of those countries.

ASEAN was formed as a result of the Bangkok Declaration of 1967 and initially had five members: Thailand, Malaysia, Indonesia, the Philippines and Singapore. Brunei subsequently joined in 1984 after it had won independence from Britain. Vietnam became the seventh member of the group, officially joining in 1995. After several years of negotiation, Burma (Myanmar) and Laos joined in 1997 and the final member of the ten, Cambodia, became a member in 1999. The only independent state in Southeast Asia which is not a member of ASEAN is now East Timor, which is still at too vulnerable and fragile a state to be able to participate for the foreseeable future.

ASEAN was established on the basis of non-intervention: that is, interaction within the group would focus entirely on economic matters, or else on matters of technical co-operation and integration, for example creating an ‘open skies agreement,’ measures to tackle the spread of avian influenza (‘bird flu’) or else transboundary environmental issues. By tradition and constitution, no member state would comment openly on political conditions within another member state and there would be no attempt at intervention or interference beyond borders. This was an essential condition since, otherwise, most states would have refused to join ASEAN. Of course, it is clear that a lot of discussion and politicking goes on behind the scenes but the main value of ASEAN is, in addition to the functional agreements and co-operation achieved, to provide the scenes behind which confidential discussions should take place. Given the enormous problems with mistrust and lack of capacity in Southeast Asia, it is not sensible to criticize ASEAN for not achieving more but to be grateful that it has been able to achieve what it has done. The limitations of the approach are evident in respect of the current political situation in Burma but the benefits of it are harder to discern, although they are certainly there.

What is Opportunity Costs ?

is what we give up when we increase the consumption or production of an activity or good. Opportunity costs arise because of our limited resources.

What is Macroeconomics ?

is a branch of economics that deals with the performance, structure, and behavior of a national or regional economy as a whole. Along with microeconomics, macroeconomics is one of the two most general fields in economics. It is the study of the behavior and decision-making of entire economies.

Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets.

What is Microeconomics ?

is a branch of economics that studies how individuals, households and firms and some states make decisions to allocate limited resources, typically in markets where goods or services are being bought and sold. Microeconomics examines how these decisions and behaviours affect the supply and demand for goods and services, which determines prices; and how prices, in turn, determine the supply and demand of goods and services.

What is Economics ?

"Economics is the study of people in the ordinary business of life."-- Alfred Marshall, Principles of economics; an introductory volume (London: Macmillan, 1890)

"Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses."-- Lionel Robbins, An Essay on the Nature and Significance of Economic Science (London: MacMillan, 1932)

Economics is the "study of how societies use scarce resources to produce valuable commodities and distribute them among different people."-- Paul A. Samuelson, Economics (New York: McGraw-Hill, 1948)

Economics is the study of how people choose to use resources.

economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures.