International TradeExam: Concepts from Student PresentationPolitical EconomyLogic of Economic LiberalismHistorical AlternativesSlide 6AutarkyProtectionismProtectionist InstrumentsLiberal Trade PoliciesSlide 11Hegemonic Stability TheoryLiberal InstitutionalismUS Steel TariffsLiberalism and Domestic PoliticsTrade InstitutionsSlide 17WTO: Current IssuesCurrent Issues: Agricultural TradeIntellectual Property RightsInternational TradeExam: Concepts from Student PresentationSecurity 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 IssuesICC: 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 EconomyStudies 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 groupsLogic of Economic LiberalismAdams 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 asymmetricalHistorical AlternativesMercantilism:–Trade serves political purposes –Accumulate surplus and money–Augment military powerMarxism–Capital gains from markets and trade while labor is exploited–Market driven imperialism–Dependency of the South to the NorthLevels Trade OpennessAutarkyAlbania 1970s, 1980sCommunist countryBroke rang with the USSR and the Council for Mutual Economic Assistance (CMEA)Strategy of self relianceLargely closed to tradeOutcomes: technological backwardness, poverty, inefficiency, weakened powerProtectionismProtect certain domestic industries from foreign competitionObjectives–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 InstrumentsQuotas–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 1980sOther non-tariff barriers:–EU ban on hormone-treated beef, US ban on Mexican tuna, Canada requirement of reusable beer containersLiberal Trade PoliciesReduce tariffsEliminate/reduce non-tariff barriers“Washington Consensus”Conditions for an Open World OrderHegemonic Stability TheoryInterests and power shape trading regimesHegemonic 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 InstitutionalismRobert 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 TariffsUS: imposes 30% steel tariffs in 2002EU challenged the US in the WTOWTO rules against steel tariffs in 2003President Bush removed the tariffs in 2004.–Why?Liberalism and Domestic PoliticsTrade redistributes wealthCreates 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 InstitutionsThe GATT (General Agreement on Tariffs and Trade), 1947Facilitate 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 WTODispute resolution mechanismTrade InstitutionsThe 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 rightsWTO: Current IssuesCurrent Issues: Agricultural TradeDeveloping countries – comparative advantage in agricultural productsIndustrial countries – heavy agricultural subsidiesThe 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 RightsPiracy of software, music, films …WTO: International Treaty on Trade Related Intellectual Property Rights (TRIPS) (1994)Issues of domestic enforcementPatents on drugs and biotechnology contentious–HIV/AID
View Full Document