POLS 360Exam # 2 Study GuideIs Walmart Good for America? film- Push and pull factors- Rubbermaid (bullied by Walmart) was most admired in 1994, Walmart in 2004- 2004 - $285 bil- International Trade = consumers vs. workers- Dependency Theory = raw materials -> China then the finished goods -> America- Low prices -> negotiation tactics -> reverse auction- Walmart cut Rubbermaid products- WTO/antidumping -> prices goods below market price, no profit, make competitorsCurrency crisis if Scotland decides to leave- British pound, other option is Euro- EU? Confidence crisis- Economically stable, high GDPInternational Trade- JS Mill, 3 main gains of trade- 1. Money (direct gain)- 2. Increase productivity (indirect)- 3. Cosmopolitan benefitsAdam Smith- “The Wealth of Nations”- Up on absolute gains and efficiency- Absolute advantage- Autarky- - can we produce everything?- - cheap- - resources- - work- - productivity decreases over time- - not everyone has absolute advantageComparative Advantage- What should you trade?- 1. Good in which you have greatest abs. adv.- 2. Good in which you have least abs. disadv.Productivity- Transfer of tech, trickle down effect- Competition, price low and supply is up = outsourcing- - cosmopolitan = contact with others1. Kantian School – information, econ and political fortunes, democratic peace/demtripod2. Asymmetrical Trade – power, militarized vs. diplomatic war3. Rational Expectations – trade with allies and not adversaries, security externalities, wealth into military strengthWho Wants Free Trade?- Systemic approach- Classic theory- Anarchy- State and non-state affect how decisions are made- Society centric approaches- - societal preferences -> interest groups, big businesses, elites- - democracies -> endogenous protection theory- State-centric approaches- - democracies vs. autocraciesTwo Level Game, Robert Putnam (1988)- International policy- Rational and unitary actors- Senate is the only body to turn treaty to domestic lawInternationalization Keohane and Milner- High trade flows and expansion of capital markets- 1. Partisan comp of govs, lib vs. cons.- 2. Strength of labor organizations – corporatism- 3. Political institutions (division of power)How do domestic institutions affect inter. Policy?1. Block signaling ->misinformation2. Freeze policies by creating prices for change (reciprocity)3. How is this going to be effective?- Trade liberalization- Free trade hurts small local businesses, unskilled workersWeak vs. Strong States- Influenced by interest groups- Two Level GameThe GATT -> increase global trade- High tariffs “beggar thy neighbor” policies – states punish each other for high tariffs, negative reciprocity- 1. Acted as forum for multilateral talks to lower tariffs- 2. Rules of conduct- - dispute resolution- - avoid retributionGATT Rules 1947-19951. Lowering of trade barriers – quotes2. Non-discrimination3. Once a concession is made cannot be taken back4. All trade disputes settled by compensationPost-materialism – because our economy needs have been metGATT has 9 rounds- Rounds of negotiations that last years, focus on lowering taxes- Uruguay Round (1986-1994)- - WTO creation- - non-tariff barriers- - intellectual propertyGATT vs. WTO- GATT is not permanent, WTO is- WTO has numbers, GATT had contracting parties- GATT focus on tangible goods, WTO odds intel. Property- WTO perm dispute body, GATT noProblems with WTO1. Labor2. Environment3. DemocracyWTO Dispute Settlement1. Does the WTO actually affect trade?- Concerns: democracy, core vs, periphery, race to the bottom, institutional standing, formality status, instit. Embeddedness – regional vs. multilateral- Gravity Model – states raise GDPs, states geographically close = trade more together- Dispute Settlement- - cheating- - consultations – 60 days 1- - panel formation 2- - hearings – 6 months- - decision made- Appeal – 90 days 3- - come in line- Retaliation 4- - legal capacityRegionalism1. Theories of Integration2. Negative vs. Positive Integration3. Steps of Integration4. Do PTAs liberalize trade?- Within a state- Between states “supranationalism”- Cohesiveness and similarities make a PTA successful- - neofunctionalism- - Ernst Haas (1950s)- - democracies/capitalist- - spillover effect, critique: simplisticLiberal Intergovernmentalism- Andrew Moravscik- Interest group- 1. Domestic -> shape preferences- 2. International bargaining -> more influence are wealthy and high populated states- 3. Institutionalization of that agreement- How do we get integration?- Negative – breaking down barriers, remove tariffs- Positive – common policies (ex. Currency)Stages of Integration1. Free Trade Area – ex. NAFTA- Eliminating trade barriers, tariffs = negative2. Customs Union- Adds on common external tariff = positive3. Common Market- Movement of all factors of production/people/capital = negative4. Economic and Monetary Union- Integration of banking system monetary policy = positive5. (theoretical) Political Union = positivePTAs are trade divergent- Trade creation – more trade within organization- Trade diversion – less global