Transcript The Nature and control of trade

The Nature and control of trade
• List as many ways and examples of controlling
trade in the global system
International Trade
• The world trade system is essential a western ‘free trade’ one
• The USA and EU have been very influential at the World Trade Organisation
in the past
• The World’s three major stock markets (London, New York and Tokyo) are
all in the ‘west’
• In a globalised world, TNCs play a crucial role in world trade, and most
TNCs originate in the EU and USA
• Emerging superpowers, especially China, have taken advantage of global
trade to develop and grow
Role of the WTO
• P 156 Oxford
How is world trade controlled?
• Overriding purpose is to help
trade flow as freely as possible
— so long as there are no
undesirable side-effects
• To abolish or reduce trade
barriers
• World Trade Organization
– An international organisation which oversees a
large number of agreements defining the "rules
of trade" between its member states
– An organization for liberalising trade (free trade –
no restrictions on companies)
– A forum for governments to negotiate trade
agreements
– A place for governments to settle trade disputes
http://welkerswikinomics.com/blog/2010/10/07/obamas-bad-decision/
• The trading system should be
…
– Without discrimination
– Freer
– Predictable
– More competitive
– More beneficial for less
developed countries
• Creation on 1 January 1995
– The biggest reform of international trade since after
the Second World War
– brought to reality the failed attempt in 1948 to create
an International Trade Organization
• The trading system is half a century older
– GATT provided rules for the system
• Differences:
– GATT dealt with trade in goods
– WTO now covers trade in services, and in traded
inventions, creations and designs (intellectual
property)
• Data show a definite statistical
link between freer trade and
economic growth
• Protectionism leads to bloated,
inefficient producers supplying
consumers with outdated,
unattractive products
– In the end, factories close and jobs
are lost despite the protection and
subsidies
Doha Trade Talks
• Launched in 2001
• Disagreement over liberalizing farm trade
foiled talks in Cancun 2003
• In 2004, rich countries pledged to cut
agricultural subsidies
• Failures in Geneva 2006 and Potsdam 2007
further damaged the Doha round
Doha Continued
• In July of 2008, trade ministers came close to
a deal, agreeing on 18 of the 20 topics
• Disputes over protecting farmers in
developing economies from import surges
ruined the nine day meeting
How is world trade controlled?
The view from the WTO:
The view from elsewhere
Essentially, the WTO is a place where
member governments go, to try to sort
out the trade problems they face with
each other. At its heart are the WTO
agreements, negotiated and signed by
the bulk of the world’s trading nations.
But the WTO is not just about liberalizing
trade, and in some circumstances its
rules support maintaining trade barriers
— for example to protect consumers,
prevent the spread of disease or protect
the environment.
The World Trade Organization is writing
a constitution for the entire globe. The
trade ministers and corporate CEOs who
control the WTO would like you to
believe that its purpose is to inspire
growth and prosperity for all. In reality,
the WTO has been the greatest tool for
taking democratic control of resources
out of our communities and putting it into
the hands of corporations.
Task:
Complete the two flow
diagrams showing how
the WTO works
The WTO Is Fundamentally Undemocratic
The policies of the WTO impact all aspects of society and the planet, but it is not a
democratic, transparent institution. The WTO rules are written by and for corporations
with inside access to the negotiations. Even simple requests for information are
denied, and the proceedings are held in secret. Who elected this secret global
government?
Local policies aimed at rewarding companies who hire local residents, use domestic
materials, or adopt environmentally sound practices are essentially illegal under the
WTO. Developing countries are prohibited from creating local laws that developed
countries once pursued, such as protecting new, domestic industries until they can be
internationally competitive.
http://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm
http://news.bbc.co.uk/1/hi/world/europe/country_profiles/2429503.stm
http://www.globalexchange.org/campaigns/wto/OpposeWTO.html
The WTO Tramples Labour and Human Rights
The UN reports that the richest 20 % of the world's
population consume 86 % of the world's resources
while the poorest 80 % consume just 14 %. WTO rules
have hastened these trends by opening up countries
to foreign investment and thereby making it easier for
production to go where the labour is cheapest and
most easily exploited and environmental costs are low.
WTO policies
have allowed
dumping of
heavily
subsidized
industrially
produced food
into poor
countries,
undermining
local
production and
increasing
hunger.
The WTO Is Destroying the
Environment
e.g. The WTO declared illegal a
provision of the Endangered Species
Act that requires shrimp sold in the
US to be caught with an inexpensive
device allowing endangered sea
turtles to escape.
The WTO has protected for
pharmaceutical companies' 'right to
profit' against governments seeking to
protect their people's health by
providing lifesaving medicines in
countries in areas like sub-Saharan
Africa, where thousands die every day
from HIV/AIDS.
The WTO supposedly operates on a
consensus basis, with equal decisionmaking power for all. In reality, many
important decisions get made in a
process whereby poor countries'
negotiators are not even invited to
closed door meetings -- and then
'agreements' are announced that poor
countries didn't even know were being
discussed.
Which box refers to each of these problems:
Environmental, death of the poorest, exclusion of poor
countries, unfair competition for farmers, increasing
inequality
Discuss what views the following people may have on the WTO:
•
Chinese Textile worker working 20hr shifts in Shenzhen
•
An Egyptian fresh goods entrepreneur
•
A Burmese military dictator funding the army through tobacco
plantations
•
A local government representative in Chile
•
An AIDs doctor in South Africa
•
A CEO of a TNC based in the USA
•
Textile factory worker recently laid off in South Carolina
•
A college student in the UK
1) Bullet point three explanations of the ways the WTO can be used to
maintain superpower status?. Consider subsidies (p156,) fairness of
votes, influence of TNCs…
2) What are the benefits of the WTO for the world?
3) Heroes or villains. Why do some people decide to protest against the
WTO? Produce a power point display to explain this.
http://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm
http://news.bbc.co.uk/1/hi/world/europe/country_profiles/2429503.stm
http://www.globalexchange.org/campaigns/wto/OpposeWTO.html
What is wrong with the current global
trading system?
• Describe and
explain the
patterns
shown
Free Trade?
• Much of the current trade takes place
between countries which are members of a
trade bloc e.g. EU as it tends to be tariff free
• Developing countries outside a trade bloc
have trade barriers which prevent access to
markets
China’s interest in Africa
p92-93 and 97 Pearson
• Africa did not have a diplomatic and economic policy with
USA, Europe or Japan
• China began trading with Africa to the sum of $32 billion in
2005 (an increase of $29 billion since 1995)
• 1/3 rd of China’s energy imports come from China
Critics:
- An example of neo-colonialism
- Support for Zimbabwe etc – legitimising dictatorships
- China supports Sudan enough though the government
supported the genocide in Darfur
TASK:
• China’s investment in Africa an example of
Neo-colonialism or south-south development?
• Evaluate how far you agree with the above
statement