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International Trade System. 1. About the ITS 2. Highly Interdependent 3. GN-Led 4. Agreements & Institutions.

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Presentation on theme: "International Trade System. 1. About the ITS 2. Highly Interdependent 3. GN-Led 4. Agreements & Institutions."— Presentation transcript:

1 International Trade System

2 1. About the ITS 2. Highly Interdependent 3. GN-Led 4. Agreements & Institutions

3 About the ITS System of exchange of goods & services between countries Based around two types of trade 1. Merchandise trade Primary goods Raw materials: foods, fuels, fibers, minerals Manufactured goods Finished goods 2. Service trade Direct relationship: buyer seller Foreign commercial presence ¤

4 ITS is Highly Interdependent

5 Interdependence 5 countries accounted for 1/3 of world service trade in 2010 US, Germany UK, China, Japan ; Goods & Services 1913$20 B= $55,000/ day 2013$18.3 T= $50 B/day

6 Factors Why has trade has increased between countries? Industrial Revolution Resource requirement Transportation Materialism Free trade philosophy Absolute versus comparative advantage ¤

7 interdependence GS- export-driven markets countries whose markets are export-driven, in that they rely heavily on producing goods for export to earn much-needed foreign currencyResource requirement GS- cash crop dependence, labor as comparative advantage Reliance on GN to buy goods, source labor Lack diversified market ¤

8 GN-Led ITS

9 GN Domination Factors Industrial Revolution European and American advantage European colonization  map


11 GN Domination Factors Post –WWI Protectionist policies Post-WWII US economic hegemony in ‘free world’ Encourage global capitalism MNC investments in allies Foster trade ties Neoliberal approach criticized Uneven trade  ~25% of countries dominate world trade ¤

12 GN Domination Factors EEs brought into loop Finance capital Expand markets Cheap labor Rest of GS lags ¤

13 Agreements & Institutions GATT  WTO Regional Trade Organizations

14 GATT General Agreement on Tariffs & Trade (GATT) Est. 1947 ITO proposal - Havana Charter Not ratified by U.S. Principle of Nondiscrimination through 'normal trade relations’ Same treatment All members All goods ¤

15 GATT Trade Rounds Geneva through Dillon 1947-1961 First 5 rounds Focus: Reduce tariffs Reduced by 73% Kennedy through Uruguay 1964-1994 Non-tariff barriers Uruguay  create WTO Pressure on US as hegemon Similar to IMS situation with US as Central Banker Japan, Germany, then also European Union bloc ¤

16 GATT  WTO World Trade OrganizationWorld Trade Organization (1995) 3:22 Formal organization Director General Dispute Settlement Body WTO structure 159 members China, Russia Objective: open trade Challenges: eliminate non-tariff barriers Doha- 2001 1 st WTO Round Still ongoing ¤ Roberto Azevêdo, 2013-2017

17 WTO Challenges: Tariffs & Quotas Traditional trade regulation tactics Less likely to use Countries respect WTO dispute rulings Countries adopt covert policies All guilty of this ¤

18 WTO Challenges: NTBs Nontariff Barriers (NTBs) Set standards Environment Safety Licenses Domestic content rules Joint venture requirements Security ¤

19 WTO Challenges: NTBs (cont.) Subsidies Agriculture Industry Automaker bailouts Solar panels ¤ CountryMarket price SubsidyFarmer’s income US$2$1$3 Brazil$2$0$2

20 Sugar subsidies video, article Subsidies Sugar Subsidies; John Oliver on Sugar Subsidies Sugar Subsidies ¤

21 WTO Challenges: New Issues Service Intellectual Property Rights (IPRs) Patents India Trademarks Copyrights

22 WTO Challenges: New Issues (cont.) Environmental issues Standards legitimate? Labor issues GS comparative advantage Regionalism EU, NAFTA, etc. Electronic commerce Dispute Resolution Mechanism Create body with formal process and power ¤

23 Disputes Trade wars much more common EU- US ‘Banana War’ 1991 (Pre-WTO) to 2009 EU- US ‘Beef War’ Hormones v. mad cows Russia –US Steel tariffs China-US Solar panel subsidies Europe banned US apples. Their potential carcinogen risk is too high, the European FSA says.the European FSA says ¤

24 WTO Dispute Resolution Use WTO to file complaints 474 dispute cases filed since 1995 WTO has power to enforce decisions Sanctions Fines Antigua and Barbuda v. U.S. DS 285DS 285 antigua-and-barbuda-turn-from-internet-gambling-to-legalized-piracy/ antigua-and-barbuda-turn-from-internet-gambling-to-legalized-piracy/ ¤

25 WTO Dispute Resolution: Antigua Case Why is Antigua upset with the US?Antigua Online gambling as IP piracy US wants to stop int’l gambling by US citizens Lots of $ at stake What did the WTO rule in 2013? WTO ruled in favor of Antigua US violated trade treaties Gave US 1 year to comply On 1/28/14- WTO allowed Antigua to suspend US copyrights on all IP for non-compliance Why did the WTO make this decision? Will the US comply?

26 Free Trade Agreement (FTA) Types FTAs under IGOs Global: WTO WTO consensus article Regional Promote intra-trade ECSC as model Trans-Pacific Partnership Proposed o12 members Anti-China FTA? ¤

27 Free Trade Agreement (FTA) Types WTO consensus articles WTO's Consensus Principle India and US Reach WTO Breakthrough over Food ¤

28 Free Trade Agreement (FTA) Types (cont.) Bilateral US FTAs- 20 countries US FTAs EU FTAs Multilateral NAFTA, CAFTA-DR Lomé ¤,_Caribbean_and_Pacific_Group_of_States_member_nations_map.svg

29 EU ASEAN Mercosur SADC SAARC Regional Economic IGOs ECOWAS EAC

30 Benefits of FTAs How do you benefit from an FTA between US-EU? Cheaper shoes Cheaper drugs EU cars cheaper, more available Dairy availability Standardize products Headlights issue Gas exports to EU ¤

31 Fair Trade

32 Objective: livable wage, invest in community Trade over aid NGOs certify Req. differ Monitoring issue Fair trade ≠ violate free trade Consumer demand Int’l protocol to end child slave labor Protect source for consistent flavor MNCs have leverage Fair trade agriculture demand v. handicrafts Mass production ¤

33 4 Most Important ITS Things 1. About the ITS 2. The ITS is Highly Interdependent 3. The ITS is GN-Led 4. About the Agreements & Institutions 5. Fair trade

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