Economic Analysis And Trade Barriers
Economic   Analysis <ul><li>I . Theories of International Trade </li></ul><ul><li>(1) Comparative Advantage </li></ul><ul>...
The Dynamic Environment of International Trade <ul><li>II. Players in the World’s Economy </li></ul><ul><li>- G7 </li></ul...
World Population Top 10-1995 In Millions
World Population Top 10-2020 In Millions
World GNP Top 10-1995 In Billions
World GNP Top 10-2020 In Billions
Merchandise Exports and Imports  (1999) Source: International  Monetary Fund, International Financial Statistics, Washingt...
U.S. Direct Investments Abroad, 1998 Host-Country Shares Source: Survey of Current Business , Bureau of Economic Analysis,...
Foreign Direct Investments in the U.S.,  1998 Source: Survey of Current Business , Bureau of Economic Analysis, U.S. Depar...
The Nationality of the World’s 100 Largest Industrial Corporations (by country of origin) SOURCES: Adapted from “The World...
The Dynamic Environment of International Trade <ul><li>III. Some History </li></ul><ul><li>- Pax Romana </li></ul><ul><li>...
The Price of Protectionism Total Costs to Number of Cost per Industry   Consumers Jobs Saved Job Saved (in $ millions) Tex...
The Effects of Tariffs Increase   Inflationary pressures.   Special interests’ privileges.   Government control and politi...
The Dynamic Environment of International Trade <ul><li>V. Major Categories of Non-tariff Barriers </li></ul><ul><li>1. Spe...
The Dynamic Environment of International Trade <ul><li>3. Standards </li></ul><ul><li>- Include standard disparities; test...
The Dynamic Environment of International Trade <ul><li>6. “Voluntary” or Orderly Agreements </li></ul><ul><li>7. Other </l...
The Dynamic Environment of International Trade <ul><li>VI. Transnational Institutions </li></ul><ul><li>1. International M...
What WTO Will Mean to  Different Industries   Banks would be allowed to compete freely in South Korea and other places w...
What WTO Will Mean to  Different Industries  Glassware tariffs as high as 30 percent on inexpensive drinking glasses wo...
Ties that Bind:  Japanese Keiretsu and Toyota Toyota has a typical keiretsu family with financial ties to its most importa...
Ford’s Keiretsu VEHICLE ASSEMBLY Company Country Percent Equity Mazda Japan 25% Kia Motors Korea 10% Aston Martin Lagonda ...
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Economic Analysis And Trade Barriers

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Economic Analysis And Trade Barriers

  1. 1. Economic Analysis And Trade Barriers
  2. 2. Economic Analysis <ul><li>I . Theories of International Trade </li></ul><ul><li>(1) Comparative Advantage </li></ul><ul><li>(2) International Product Life Cycle </li></ul><ul><li>(3) Production Sharing </li></ul><ul><li>(4) Internalization </li></ul>
  3. 3. The Dynamic Environment of International Trade <ul><li>II. Players in the World’s Economy </li></ul><ul><li>- G7 </li></ul><ul><li>- NICS </li></ul><ul><li>- LDCS </li></ul>
  4. 4. World Population Top 10-1995 In Millions
  5. 5. World Population Top 10-2020 In Millions
  6. 6. World GNP Top 10-1995 In Billions
  7. 7. World GNP Top 10-2020 In Billions
  8. 8. Merchandise Exports and Imports (1999) Source: International Monetary Fund, International Financial Statistics, Washington D. C., December 1999.
  9. 9. U.S. Direct Investments Abroad, 1998 Host-Country Shares Source: Survey of Current Business , Bureau of Economic Analysis, U.S. Department of Commerce, Washington D.C. July and August 1999: pp. 50 and 52
  10. 10. Foreign Direct Investments in the U.S., 1998 Source: Survey of Current Business , Bureau of Economic Analysis, U.S. Department of Commerce, Washington D.C. July and August 1999: pp. 50 and 52 Parent-Country Shares
  11. 11. The Nationality of the World’s 100 Largest Industrial Corporations (by country of origin) SOURCES: Adapted from “The World’s 500 Largest Industrial Corporations,” Fortune, Aug. 4, 1997 SOURCES: Adapted from “The World’s 500 Largest Industrial Corporations,” Fortune, Aug. 4, 1997 The Nationality of the World’s 100 Largest Industrial Corporations (by country of origin ) United States 67 47 47 33 32 24 24 36 Germany 13 13 8 12 14 14 13 12 Britain 7 7 5 6 4 1 2 5 France 4 11 5 10 6 12 13 11 Japan 3 7 12 18 23 37 29 22 Italy 2 3 3 4 4 3 4 3 Netherlands-United Kingdom 2 2 2 2 2 2 2 -- Netherlands 1 3 1 1 1 2 2 5 Switzerland 1 1 2 3 3 3 5 3 Argentina -- -- 1 -- -- -- -- -- Belgium -- 1 1 -- -- -- -- 1 Brazil -- 1 -- 1 1 -- -- -- Canada -- 2 3 -- -- -- -- -- India -- -- 1 -- -- -- -- -- Kuwait -- -- 1 -- -- -- -- -- Mexico -- 1 1 1 1 -- 1 -- Venezuela -- 1 1 1 1 -- 1 -- South Korea -- -- 4 2 4 2 4 -- Sweden -- -- 1 2 1 -- -- -- South Africa -- -- 1 1 -- -- -- -- Spain -- -- -- 2 2 -- -- -- Turkey -- -- -- -- 1 -- -- -- China -- -- -- -- -- -- -- 2 1963 1979 1984 1990 1993 1995 1996 2000 2-4 Irwin/McGraw-Hill
  12. 12. The Dynamic Environment of International Trade <ul><li>III. Some History </li></ul><ul><li>- Pax Romana </li></ul><ul><li>- Pax Americana </li></ul><ul><li>- Pax Pacificana </li></ul><ul><li>IV. The Price of Protectionism </li></ul><ul><li>1. Trade Barriers </li></ul><ul><li>- Tariff Barriers </li></ul><ul><li>- Non-tariff Barriers </li></ul>
  13. 13. The Price of Protectionism Total Costs to Number of Cost per Industry Consumers Jobs Saved Job Saved (in $ millions) Textiles and apparel $27,000 640,000 $ 42,000 Carbon Steel 6,800 9,000 $ 750,000 Autos 5,800 55,000 $ 105,000 Dairy products 5,500 25,000 $ 220,000 Shipping 3,000 11,000 $ 270,000 Meat 1,800 11,000 $ 160,000 SOURCE: Michael McFadden, “Protectionism Can’t Protect Jobs,” Fortune, May11, 1987, pp. 125.
  14. 14. The Effects of Tariffs Increase Inflationary pressures. Special interests’ privileges. Government control and political considerations in economic matters. Weaken Balance-of-payments positions. Supply-and-demand patterns. International understanding (they can start trade wars). Restrict Manufacturer’ supply sources. Choices available to consumers Competition.
  15. 15. The Dynamic Environment of International Trade <ul><li>V. Major Categories of Non-tariff Barriers </li></ul><ul><li>1. Specific Limitations on Trade </li></ul><ul><li>- Quotas </li></ul><ul><li>- Licensing </li></ul><ul><li>- Minimum Import Prices </li></ul><ul><li>2. Customs and Administrative Entry Procedures </li></ul><ul><li>- Antidumping Practices </li></ul><ul><li>- Tariff Classification </li></ul><ul><li>- Documentation </li></ul><ul><li>- Fees </li></ul>
  16. 16. The Dynamic Environment of International Trade <ul><li>3. Standards </li></ul><ul><li>- Include standard disparities; testing methods, and packaging/labeling </li></ul><ul><li>4. Government Participation in Trade </li></ul><ul><li>- Procurement Policies </li></ul><ul><li>5. Charges on Imports </li></ul><ul><li>- Prior import deposits </li></ul><ul><li>- Administrative fees </li></ul>
  17. 17. The Dynamic Environment of International Trade <ul><li>6. “Voluntary” or Orderly Agreements </li></ul><ul><li>7. Other </li></ul><ul><li>- Service barriers </li></ul><ul><li>- Investment barriers </li></ul><ul><li>* Note that most common forms of non-tariff barriers are subsidies and quotas. </li></ul>
  18. 18. The Dynamic Environment of International Trade <ul><li>VI. Transnational Institutions </li></ul><ul><li>1. International Monetary Fund </li></ul><ul><li>2. World Bank </li></ul><ul><li>3. World Trade Organization </li></ul><ul><li>( Formerly GATT ) </li></ul><ul><li>4. Regional Institutions </li></ul>
  19. 19. What WTO Will Mean to Different Industries   Banks would be allowed to compete freely in South Korea and other places where they are restricted.  Insurance companies would be able to sell policies in India, one of the Worlds most tightly closed markets.  Movies would have better protection from Thai film counterfeiters.  Pharmaceuticals would have better protection from Argentine imitators.  Computer software makers would have better protection from Brazilians who rip off copyrighted programs. Gainers SOURCE: Adapted from “What free trade will mean to different Industries,” Fortune, August 26, 1991, P.92
  20. 20. What WTO Will Mean to Different Industries  Glassware tariffs as high as 30 percent on inexpensive drinking glasses would be reduced, threatening some 40,000 jobs.  Textiles would gradually lose quotas and tariffs that protect 1.1 million U.S. workers - and add 50 percent to wholesale prices of clothing.  Peanuts would lose quotas that limit imports to a handful and that protect 19,000 American farmers .  Dairy imports of foreign cheese, now limited to 19,000 tons a year, would go up, hurting 240,000 U.S. farmers.   Sugar import ceilings, now 25 percent of the nine million tons the United States uses each year, would go, threatening 11,000 sugar beet and cane growers. Losers SOURCE: Adapted from “What free trade will mean to different Industries,” Fortune, August 26, 1991, P.92.
  21. 21. Ties that Bind: Japanese Keiretsu and Toyota Toyota has a typical keiretsu family with financial ties to its most important suppliers. Some of those companies, with the percentage of each that Toyota owns: Lighting Koito Mfg. 19.0 % Rubber Toyoda Gosel 41.4 Disc Brakes Akebona 13.9 Transmissions, clutches, brakes Aisin Seiki 22.0 Clocks Jeco 34.0 Electronics Nippondenso 23.6 Seat belts, switches Tokai Rika 28.2 Steel Aichi Steel Works 21.0 Upholstery material Kyowa Leather 33.5 Door sashes, molding Shiroki 13.2 Painting Trinity 30.2 Mufflers Futaba Industrial 13.2 SOURCE: Adapted from “Japan: All in the Family,” Newsweek, June 10, 1991, p 38.
  22. 22. Ford’s Keiretsu VEHICLE ASSEMBLY Company Country Percent Equity Mazda Japan 25% Kia Motors Korea 10% Aston Martin Lagonda Britain 75% Autolatina Brazil-Argentina 49% Iveco Ford Truck Britain 48% PARTS PRODUCTION Company Country Component Percent Equity Cummins U.S. Engines 10% Excel Industries U.S. Windows 40 Decoma International Canada Body Parts, Wheels 49 SOURCE: Adapted from “Learning from Japan,” Business Week , January 27, 1992, p. 55.
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