Carbaugh, Chap. 7 1 The US and international trade  Smoot-Hawley Tariff Act (1930)  Reciprocal Trade Agreements Act (1934)  “Most favored nation" (MFN) clause  General Agreement on Tariffs and Trade [GATT] (1947)  World Trade Organization (1995) Trade regulation

Carbaugh, Chap. 7 2 GATT - Postwar trade liberalization  Principle of non-discrimination: "Normal Trade Relations" treatment  equal treatmt National treatment of imported goods Same safety & health standards for imports as home goods  Trade dispute resolution  Use tariffs rather than quotas Trade regulation

Carbaugh, Chap. 7 3 GATT - Postwar trade liberalization (2)  Forum to reduce tariffs and NTBs  Kennedy Round ( ) - first multi-lateral negotiations; CUT TARIFFS  Tokyo Round ( ) – Lower NTBs Uruguay Round ( ) – New areas:  Intellectual property, services, agriculture  Included developing nations Trade regulation

Carbaugh, Chap. 7 4 GATT becomes WTO, January 1995  Members must adhere to all agreements negotiated under GATT (not pick and choose)  Covers trade in goods, services, intellectual property and investment  Strengthens GATT's dispute-settlement mechanisms Trade regulation

Carbaugh, Chap. 7 5 Controversy over WTO  Infringement of national sovereignty  Environmental protection  Opposition to "globalization" Trade regulation

Carbaugh, Chap. 7 6 US “trade remedy” laws  Escape clause  steel tariffs  Countervailing duties – offset foreign subsidies  Canadian lumber  Anti-dumping duties  Unfair trade practices  Banana wars/retaliation  Protection of intellectual property – hi tech piracy  Trade adjustment assistance Trade regulation

Carbaugh, Chap. 7 7 US “industrial policy”  Broad policies to foster economic growth  Aid to targeted sectors  Agriculture, ship-building, energy, technology, manufacturing (autos, for example), etc.  Tariff protection of declining sectors  Export promotion and financing  Export-Import Bank  Commodity Credit Corporation  Knowledge based growth policy Industrial policy

Carbaugh, Chap. 7 8 Economic sanctions  Trade sanctions  Financial sanctions  Success of sanctions depends on:  Number of nations imposing sanctions  Nature of ties between target and imposing nations  Extent of political opposition in target nation  Cultural factors in target nation Trade regulation