chapter 2 international trade frameworks and policy

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Chapter 2International Trade Frameworks and Policy


The Historical Dimension

• The rise and fall of the Roman Empire and the emergence of feudalism can be attributed to trade

•



• The principal approaches used to implement this emphasis was the Pax Romana, or the “Roman Peace,” and the common coinage



• The Smoot-Hawley Act raised import duties to reduce the volume of imports into the United States to help restore domestic employment• •



• Global division• After 1945, the world was split into West and

East• With Soviet Union as the leader of the Eastern bloc

and the United States for the Western world• •



• Global division• The charter for an International Trade

Organization (ITO), a series of agreements among 53 countries, was signed in 1948

• It was designed to cover:• • • • •



• Global division• The General Agreement on Tariffs and Trade

(GATT) was initiated in 1947• The World Bank and the International

Monetary Fund were created


Transnational Institutions Affecting World Trade

• General Agreement on Tariffs and Trade (GATT)• • • • • •



• World Trade Organization (WTO)• Created in _______• • Responsible for:• • •



• The Doha Round was initiated to:• •



• International Monetary Fund (IMF)• Developed in ___• Designed to provide ____________• •



• World Bank• Also recognized as the International Bank for

Reconstruction and Development, was formed in ____

• Key functions:• • • •



• World Bank• Current areas of focus:

• • • • • • •



• World Bank• Major challenge -

• • • •



• Regional institutions• European Coal and Steel Community – • Customs unions - • European Union (EU) -



• Regional institutions• North American Free Trade Agreement

(NAFTA), MERCOSUR - Latin America, and Gulf Cooperation Council (GCC) -

• • Transatlantic Business Dialogue (TBD)


Trade Positions Compared

• International trade positions have changed substantially when measured in terms of _______________

• The ____ share of total world export has declined precipitously since 1950s

• An important development is the rise of __________


Trade Positions Compared• Factors behind the decline in U.S.

international competitiveness:• • • Perception within the U.S. private sector about

international marketing being risky and complicated• • • •


The Impact of Trade and Investment

• The effect of trade – Export is important as it:• • • • • •



• The effect of trade – Importance of imports:• • •



• The effect of international investment• Foreign direct investment is extensive in

many U.S. industries• Almost one in seven U.S. manufacturing employees

works for a ____________•


The Impact of Trade and Investment• Even though theory suggests an open

investment policy that welcomes foreign corporations, some degree of uneasiness exists about the rapid growth of such investment



• Restriction on investments may:• • • •


Policy Responses to Trade Problems

• Have consisted mainly of political ad hoc reactions, which over the years have changed to protectionism

• Voluntary import restrictions •



• Non-tariff barriers • • • •



• Export promotion efforts• Earn foreign currency, encourage domestic

employment, and increase domestic economic activity

• Offering mixed aid credits •



• Formation of export consortia •


A Strategic Outlook for Trade and Investment Policies• A U.S. perspective• Improve the quality and amount of

information government and business share to facilitate competitiveness

• • Overcome its export reluctance and its short-

term financial orientation• Invest in its people, providing education and

training suited to the competitive challenges•


A Strategic Outlook for Trade and Investment Policies

• Closer government–business collaboration is seen as one key to enhanced competitiveness• •


A Strategic Outlook for Trade and Investment Policies

• An international perspective:• Bilateral or multilateral trade and investment

negotiations must continue• • Design new mechanisms to evaluate restraint

measures•

chapter 2 international trade frameworks and policy

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