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Ipe05

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    Ipe05 Ipe05 Presentation Transcript

    • Y376 International Political Economy January 25, 2012
    • Pioneers of Trade Theory
      • Adam Smith, The Wealth of Nations (1776) – first defense of free market policies
      • David Ricardo, Principals of Political Economy and Taxation (1817) - introduced theory of comparative advantage
    • Graphical Version of Ricardian Theory
    • Heckscher-Ohlin Model
      • Basic model: two countries, two goods, two factors of production (Ricardo only had one)
      • Differences in factor endowments lead to “gains from trade”
      • Both countries will be better off if they specialize in producing goods which require a relatively abundant factor and then trade with another country
      • For maximum benefit, the other country should have a very different factor endowment
    • Let’s Play the Trade Ruler Game!
      • http://nobelprize.org/educational_games/economics/trade/game/ruler.html
    • History of U.S. Trade Policy
      • Smoot-Hawley Tariff of 1930
      • Depression High Tariffs
      • FDR (espec. Cordell Hull ) favors free trade for post WW2 period
      • 1947 -- Congress rejects International Trade Organization treaty proposed initially at Bretton Woods
      • The GATT becomes the main trade regime
    • Figure 3-1. Average U.S. Tariff Rates on Dutiable Imports, 1821-2000, in Percentages Source: U.S. International Trade Commission; U.S. Department of Commerce, Bureau of the Census, Historical Statistics of the United States ; and Statistical Abstract of the United States , various years.
    • Overall Tariff Levels and Trade/GNP, 1850-1990
    • Figure 3-2. Growth in World Exports, 1958-2006, in Billions of Current Dollars Source: International Monetary Fund, Direction of Trade Statistics Yearbook (various years).
    • Figure 3-3. Trade/GDP in the US, Britain, Germany, France, and Japan, 1960-2006, in Percentages Sources: World Bank, World Development Indicators 2001 CD-ROM (Washington, D.C.: World Bank, 2001): OECD.Stat, http://stats.oecd.org/ .
    • Interregional Trade Flows, 1990
    • Main Rules of the GATT
      • Nondiscrimination among members of the GATT
        • most favored nation (MFN) principle
        • tariffs must be adjusted to reflect MFN levels
      • Participation in multilateral trade negotiations to lower tariffs and nontariff barriers
      A tariff is a tax that is charged on the value of imported goods.
    • Multilateral Trade Negotiations
      • 1947 Geneva
      • 1949 Annecy
      • 1950 Torquay
      • 1956 Geneva
      • 1960-61 Dillon
      • 1962-67 Kennedy
      • 1973-79 Tokyo
      • 1986-93 Uruguay
      • 2000- Doha
      Biggest tariff reductions occurred in the Kennedy Round. Tokyo Round began discussions of non-tariff barriers. Uruguay Round established the basis for the World Trade Organization.
    • Main Issues in the Tokyo Round
      • Tariffs
      • Conflict resolution; dispute settlement
      • Nontariff barriers:
        • subsidies
        • government procurement
        • standards
        • custom valuation
        • licensing
    • Example of a Subsidies Dispute: Airbus vs. Boeing This is a Boeing 777 This is an Airbus 300 Latest WTO ruling (video)
    • Main Issues in the Uruguay Round
      • Agriculture (mainly subsidies)
      • Trade in Services
      • Trade-related Intellectual Property (TRIPs)
      • Trade-related Investment Measures (TRIMs)
      French farmers protesting the Maastricht Treaty inEurope.
    • Multilateral Trade Negotiations: The Doha Round
      • Begun in early 2000
      • Major conferences so far:
        • 2001 Doha (Qatar)
        • 2003 Cancun
        • 2004 Geneva
        • 2005 Hong Kong
        • 2006 Geneva
        • 2007 Potsdam
        • 2008 Geneva
      Pascal Lamy calls time out on Doha Round in 2006
    • Main Issues in the Doha Round
      • Timing of implementation of Uruguay Round agreements, espec. Agriculture, services, regional agreements, TRIPs/TRIMs
      • Reductions in agricultural subsidies and textile/apparel tariffs in the rich industrialized countries
    • Main Issues in the Doha Round
      • Timing of implementation of Uruguay Round agreements, espec. Agriculture, services, regional agreements, TRIPs/TRIMs
      • Reductions in agricultural subsidies and textile/apparel tariffs in the rich industrialized countries