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Trade & Policy Issues Trade Interventions & Trade Agreements Framework for Analyzing International Trade & Trade Policy Interventions.

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Presentation on theme: "Trade & Policy Issues Trade Interventions & Trade Agreements Framework for Analyzing International Trade & Trade Policy Interventions."— Presentation transcript:

1 Trade & Policy Issues Trade Interventions & Trade Agreements Framework for Analyzing International Trade & Trade Policy Interventions

2 Trade Policy Interventions (Imports) Tariffs - absolute vs ad valorum, variable levy March Mexico to raise tariffs on 90 U.S. agr & industrial products, worth more than $2.4 B Tariff on fresh grapes - 45% Source: World Tariff Profiles, WTO Geneva Canadian Tariffs on Imports % Average rate across each category

3 Tariff Lines - Specific Examples HS Code ======================================================== Broilers for domestic production: 238% Turkeys: 154.5% Common wheat 76.5% Durum wheat 49% Barley (malting) 94.5% 10.06Rice Free Milk, cream or butter substitutes, 50% or more dairy content, 212% ======================================================== Canadian Boarder Services Agency - Chapter-by-Chapter Customs Tariff – T

4 Canadian Tariffs Source: World Tariff Profiles, WTO, Geneva Proportion of tariff lines duty-freeMax tariff in category Share of Harmonized System (HS) nominclature 6 digit sub-headings with at least one bound tariff line

5 US Tariffs Source: World Tariff Profiles, WTO, Geneva

6 Japan Tariffs Source: World Tariff Profiles, WTO, Geneva

7 EU Tariffs Source: World Tariff Profiles, WTO, Geneva

8 Examples of TRQ and over-quota tariffs Source: Canadian Dairy Commission (2011) ProductTRQ (000 t)Tariff (%) Skim Milk Powder Whey Powder Butter Cheese Ice cream Quotas & TRQs (tariff rate quotas)

9 Trade Policy Interventions (Imports) Non-Tariff Barriers (NTB) Production Standards: Phyto-sanitary restrictions Labeling, documentation, containers US refuses to allow Mexican trucks to carry cargo over U.S. roads (safety concerns) July Product of Canada - virtually all ingredients (98%), processing and labour is Canadian Made in Canada - manufactured or processed in Canada - ingredients imported or domestic Country of Origin Labeling (COOL); fresh pork, beef, lamb fresh fruits & vegetables Pre Product of Canada - 51% Canadian content by value

10 Trade Policy Interventions Exports Export taxes (Argentina, developing countries) Export subsidies (EU, US - EEP) Voluntary Export Restrictions (VERs) Indirect Policies Direct or indirect production supports Production subsidies Supports for providing environmental services

11 Trade Policy Agreements Countries have different objectives (agendas) International agreements Gobal LevelWTO (GATT) RegionalEuropean Union, NAFTA, ASEAN, APTA, CARICOM BilateralCanada and its dancing partners: Chile, Columbia, Costa Rica, EFTA, Peru, Switzerland, India (in progress 2011) Economic self sufficiency protect producers, consumers expand exports Political (domestic constituencies)

12 Post WWII Environment Origins of the WTO (ITO) Why was a new world order important? Bretton Woods Agreements July 1944, delegates from 44 nations IMF, World Bank, GATT/WTO US Senate: failure to ratify (ITO) Birth of the GATT Consensus document Temporary measuresEliminate trade distorting policies import barriers (quotas, tariffs) production subsidies Multiple rounds Kennedy, Tokyo, Uruguay, Doha Doha is on life support

13 Two Country Analytical Model Compatibility of excess demand and supply relationships Select one of the two countrys currency for vertical axis of trade sector Use exchange rate to adjust either ED or ES Simplifying assumptions No transportation costs No governmental interference Excess demand & supply framework OR - assume 1:1 rate of exchange

14 Two Country Analytical Model Country 2 low price Country 1 High Price QImports Exports

15 Relaxing Simplifying Assumptions Governmental influence on volume of trade Tariffs, Subsidies Quotas, Licenses Exchange rate management Other non-tariff barriers Non-zero transportation costs Handled in same way as interregional trade

16 Two Country Analytical Model Absolute Tariff Country 2 Country 1 QImports Exports Country 2 - OR Rest of the world

17 Two Country Analytical Model Percentage (Ad valorum) Tariff Country 2 Country 1 QImports Exports Exchange rate devaluation - Importer

18 Two Country Analytical Model Exporter Devaluation Country 2 Country 1 QImports Exports

19 Two Country Analytical Model Import Quota Country 2 Country 1 QImports Exports

20 Two Country Analytical Model Export Subsidy Country 2 Country 1 QImports Exports


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