READING
PASSAGE 2
You
should spend about 20 minutes on Questions 14-26, which are based on Reading
Passage 1 below.
DELIVERING THE GOODS
The vast
expansion in international trade owes much to a revolution in the business
of moving freight
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A
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International trade is growing
at a startling pace. While the global economy has been expanding at a bit
over 3% a year, the volume of trade has been rising at a compound annual
rate of about twice that. Foreign products, from meat to machinery, play a
more important role in almost every economy in the world, and foreign
markets now tempt businesses that never much worried about sales beyond
their nation's borders.
|
B
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What lies behind this
explosion in international commerce? The general worldwide decline in trade
barriers, such as customs duties and import quotas, is surely one
explanation. The economic opening of countries that have traditionally been
minor players is another. But one force behind the import-export boom has
passed all but unnoticed: the rapidly falling cost of getting goods to
market. Theoretically, in the world of trade, shipping costs do not matter.
Goods, once they have been made, are assumed to move instantly and at no
cost from place to place. The real world, however, is full of frictions.
Cheap labour may make Chinese clothing competitive in America, but if
delays in shipment lie up working capital and cause winter coats to arrive
in spring, trade may lose its advantages.
|
C
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At the turn of the 20th
century, agriculture and manufacturing were the two most important sectors
almost everywhere, accounting for about 70% of total output in Germany,
Italy and France, and 40-50% in America, Britain and Japan. International
commerce was therefore dominated by raw materials, such as wheat, wood and
iron ore, or processed commodities, such as meat and steel. But these sorts
of products are heavy and bulky and the cost of transporting them
relatively high.
|
D
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Countries still trade
disproportionately with their geographic neighbours. Over time, however,
world output has shitted into goods whose worth is unrelated to their size
and weight. Today, it is finished manufactured products that dominate the
flow of trade, and, thanks to technological advances such as lightweight
components, manufactured goods themselves have tended to become lighter and
less bulky. As a result, less transportation is required for every dollar's
worth of imports or exports.
|
E
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To see how this influences
trade, consider the business of making disk drives for computers. Most of
the world's disk-drive manufacturing is concentrated in South-east Asia.
This is possible only because disk drives, while valuable, are small and
light and so cost little to ship. Computer manufacturers in Japan or Texas
will not face hugely bigger freight bills if they import drives from
Singapore rather than purchasing them on the domestic market. Distance
therefore poses no obstacle to the globalisation of the disk-drive
industry.
|
F
|
This is even more true of the
fast-growing information industries. Films and compact discs cost little to
transport, even by aeroplane. Computer software can be 'exported' without
ever loading it onto a ship, simply by transmitting it over telephone lines
from one country to another, so freight rates and cargo-handling schedules
become insignificant factors in deciding where to make the product.
Businesses can locate based on other considerations, such as the
availability of labour, while worrying less about the cost of delivering
their output.
|
G
|
In many countries deregulation
has helped to drive the process along. But, behind the scenes, a series of
technological innovations known broadly as containerisation and intermodal
transportation has led to swift productivity improvements in
cargo-handling. Forty years ago, the process of exporting or importing
involved a great many stages of handling, which risked portions of the
shipment being damaged or stolen along the way. The invention of the
container crane made it possible to load and unload containers without
capsizing the ship and the adoption of standard container sizes allowed
almost any box to be transported on any ship. By 1967, dual-purpose ships,
carrying loose cargo in the hold* and containers on the deck, were giving
way to all-container vessels that moved thousands of boxes at a time.
|
H
|
The shipping container
transformed ocean shipping into a highly efficient, intensely competitive
business. But getting the cargo to and from the dock was a different story.
National governments, by and large, kept a much firmer hand on truck and
railroad tariffs than on charges for ocean freight. This started changing,
however, in the mid-1970s, when America began to deregulate its
transportation industry. First airlines, then road hauliers and railways,
were freed from restrictions on what they could carry, where they could
haul it and what price they could charge. Big productivity gains resulted.
Between 1985 and 1996, for example, America's freight railways dramatically
reduced their employment, trackage, and their fleets of locomotives - while
increasing the amount of cargo they hauled. Europe's railways have also
shown marked, albeit smaller, productivity improvements.
|
I
|
In America the period of huge
productivity gains in transportation may be almost over, but in most
countries the process still has far to go. State ownership of railways and
airlines, regulation of freight rates and toleration of anti-competitive practices,
such as cargo-handling monopolies, all keep the cost of shipping
unnecessarily high and deter international trade. Bringing these barriers
down would help the world’s economies grow even closer.
* hold: ship's storage area
below deck
|
Questions 14-17
Reading Passage has nine
paragraphs, A-I.
Which paragraph contains
the following information?
Write the correct letter, A-I,
in boxes 14-17 on your answer sheet.
14
|
a
suggestion for improving trade in the future
the
effects of the introduction of electronic delivery
the
similar cost involved in transporting a product from abroad or from a local
supplier
the
weakening relationship between the value of goods and the cost of their
delivery
|
15
|
16
|
17
|
Questions 18-22
Do the following statements
agree with the information given in Reading Passage 2?
In boxes 18-22 on your
answer sheet, write
TRUE
|
if
the statement agrees with the information
|
FALSE
|
if the
statement contradicts the information
|
NOT
GIVEN
|
if
there is no information on this
|
18
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International
trade is increasing at a greater rate than the world economy.
Cheap
labour guarantees effective trade conditions.
Japan
imports more meat and steel than France.
Most
countries continue to prefer to trade with nearby nations.
Small
computer components are manufactured in Germany.
|
19
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20
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21
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22
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Questions 23-26
Complete the summary using the
list of words, A-K, below.
Write the correct letter, A-K,
in boxes 23-26 on your answer sheet.
THE TRANSPORT
REVOLUTION
|
Modern cargo-handling methods
have had a significant effect on 23 _________________ as the business of moving freight around
the world becomes increasingly streamlined. Manufacturers of computers, for
instance, are able to import 24 _________________ from
overseas, rather than having to rely on a local supplier. The introduction
of 25 _________________ has meant that bulk cargo can be safely and
efficiently moved over long distances. While international shipping is
now efficient, there is still a need for governments to reduce 26
_________________ in order to free up the domestic cargo sector.
|
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