International Trade

Important Terms
    •Tariffs
    •Non-Tariff Barriers (NTBs)
        -Quotas
        -Export restraints
        -Domestic content legislation
        -Regulatory measures
    •Subsidies
    •Dumping

What is the Benefit of Trade?
    •For liberals?
        -Comparative advantage and peaceful competition
    •For mercantilists?
        -Strategic trade theory
        -Trade as a tool of foreign policy
    •Comparative advantage and competitive advantage

The World Trade Organization
•149 members

•Components of the WTO
        -The GATT (general agreement on tariffs and trade)
        -The GATS (general agreement on trade in services)
        -The DSM (dispute settlement mechanism)
    •The rule-making process
        -Consensus and specificity

The Rules of the GATT
    •Non-discrimination
        -Also known as MFN (most-favored nation status)
    •A rules-based system
    •Applies to products as they cross borders
    •Historical focus on manufactures

Exceptions to the Rules
    •Prison labor
    •Public morals
    •Protection of national treasures
    •Protection of health and the environment
    •National security
    •Among others
        -These are all from Articles XX and XXI of the GATT

History of the GATT
    •Distant history
        -British unilateral free trade
        -US Reciprocal Trade Agreements Act (RTAA)
    •WW2, and postwar negotiations
        -Discrimination vs. absolute tariff levels
    •The Havana Treaty and the ITO
        -The demise of the ITO:  agriculture and sovereignty
    •The adoption of the GATT
        -Allowed both some discrimination and high tariffs
    •The Kennedy Round (1962-67)
        -Reduced tariffs by 1/3, to an average of 9%
    •As tariffs decreased, NTBs increased
    •The Tokyo Round (1973-1979)
        -NTBs, dumping, subsidies, etc.
        -Further tariff reductions

History of the WTO
    •Uruguay Round (1986-93)
        -22,000 pages
        -Major changes:
            -The creation of the WTO, including the DSM
            -Trade in services
            -Protection of intellectual property
            -New rules for agriculture and raw materials
    •The Seattle meeting
        -The failure to launch the Millennium Round
    •The Doha meeting, and the Doha Round 
    •Cancun and Hong Kong
    •Major items under negotiation:
        -Agriculture and textiles     
        -Intellectual property
-Financial and investment issues

Contemporary Issues in International Trade
    •How to cope with the increase in intra-firm trade
    •What is the role of the US in the system?
        -Can the US afford to continue importing at current levels?
        -Free trade vs. fair trade
        -Multilateralism and unilateralism
    •The credibility of the DSM

Is the system fair to developing countries?
    •Complaints about the Uruguay Round
        -It did too much for 1st world concerns (intellectual property, services)
        -It did too little for developing country concerns (agriculture, textiles)

The Seattle phenomenon
    •Environmental concerns
        -The environment and the DSM
    •Social concerns
        -The development perspective
        -The protectionist perspective
    •Trade, democracy, and representation