Transcript Ozone Depletion I

International Trade
Exam: Concepts from Student
Presentation
 Security Council Reform
– Why is SC reform on the UN agenda?
– Which four countries are considered for permanent membership?
 CEDAW Convention: Is the US a signatory? Why? Role in
Women’s Rights Issues
 ICC: When was it established?
– What kind of crimes does it prosecute?
– Is the US a party and why? Are EU countries parties?
– Similarities and differences with tribunals (Yugoslavia, Rwanda)
 Terrorism: policy options for dealing with international
terrorism; pros and cons of each;
Political Economy
 Studies the relationship between economics and
politics (Gilpin 1975)
– Politics shape the framework of economic transactions
– Economic activities generate and redistributes wealth
– Reshapes power and politics among groups
Logic of Economic Liberalism
 Adams Smith (1723-1790) and David Ricardo
(1772-1823)
 Gains from trade
–
–
–
–
Comparative advantage
Specialization and economies of scale
Trade: consume more at a lower price
Gains from trade common but asymmetrical
Historical Alternatives
 Mercantilism:
– Trade serves political
purposes
– Accumulate surplus and
money
– Augment military power
 Marxism
– Capital gains from
markets and trade
while labor is
exploited
– Market driven
imperialism
– Dependency of the
South to the North
Levels Trade Openness
Autarky
Albania 1970s, 1980s
 Communist country
 Broke rang with the USSR and the Council for
Mutual Economic Assistance (CMEA)
 Strategy of self reliance
 Largely closed to trade
 Outcomes: technological backwardness, poverty,
inefficiency, weakened power
Protectionism
 Protect certain domestic industries from foreign
competition
 Objectives
–
–
–
–
–
–
Self-sufficiency and security (agriculture, military equipment)
Protect infant industry
Predictability, less dependency, social stability
Satisfy political lobbies
Respond to predatory dumping on the part of trading partners
Generate direct government revenue (if tariffs used)
Protectionist Instruments
 Quotas
– Quotas on textile imports;
– Multifibre Arrangement (1974)
 Tariffs
– US tariffs over 9%: canned tuna, frozen orange juice, rubber
footwear, non-athletic women's footwear, ceramic tiles, etc.
 Subsidies
– U.S. government support for sugar cane, cotton, corn subsidies
– Korean steel and electronics 1980s
 Other non-tariff barriers:
– EU ban on hormone-treated beef, US ban on Mexican tuna,
Canada requirement of reusable beer containers
Liberal Trade Policies
 Reduce tariffs
 Eliminate/reduce non-tariff barriers
 “Washington Consensus”
Conditions for an Open World Order
Hegemonic Stability Theory
 Interests and power shape trading regimes
 Hegemonic states as guarantors of free trade
»
»
»
»
Gain most
Less vulnerable to social disruption
Less vulnerable to cheating
Power to persuade others to join
 Examples?
Liberal Institutionalism
 Robert Keohane: After Hegemony (1986)
– Even hegemonic states need institutions to achieve reciprocity
and reduce transaction costs
– Institutions are “sticky:” persist even after decline of hegemon,
or despite short-term interest of the hegemon
– Examples?
US Steel Tariffs
 US: imposes 30% steel tariffs in 2002
 EU challenged the US in the WTO
 WTO rules against steel tariffs in 2003
 President Bush removed the tariffs in 2004.
– Why?
Liberalism and Domestic Politics
 Trade redistributes wealth
 Creates losers and winners:
– Consumers win
– Import-competing sectors loose; export sectors win
– Does labor loose or win?
 Who looses and who wins from higher steel tariffs?
Trade Institutions
 The GATT (General Agreement on Tariffs and
Trade), 1947
 Facilitate negotiations to reduce tariffs and NTBs
– Average tariffs dropped from 40% of the goods’ value in 1945 to
3% of the goods’ value in 2002
 “Rounds” of negotiations
-The Kennedy round (1960s)
-Doha Round (2001) under the WTO
 Dispute resolution mechanism
Trade Institutions
 The WTO (World Trade
Organization), 1995
– Replaced GATT
– International organization with a staff of
approximately 500
– Expanded menu of cooperation
» Trade in services, intellectual
property rights
» Adjudicates disputes
» Trade and environment, labor
rights, human rights
WTO: Current Issues
Current Issues: Agricultural Trade
 Developing countries – comparative advantage in
agricultural products
 Industrial countries – heavy agricultural subsidies
 The Doha (2001) round and the road ahead?
– Negotiations broke down in Cancun
– EU faces pressures for internal reform of the Common
Agricultural Policies
– But liberalization opposed by strong domestic lobbies in
industrial countries
– What to do?
Intellectual Property Rights
 Piracy of software, music, films …
 WTO: International Treaty on Trade Related
Intellectual Property Rights (TRIPS) (1994)
 Issues of domestic enforcement
 Patents on drugs and biotechnology contentious
– HIV/AID drugs