Globalization : describes a process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade
What is the WTO? <ul><li>An organization for liberalizing trade and a forum to negotiate trade agreements. </li></ul><ul><li>It operates and mediates a set of trade rules. </li></ul><ul><li>There is a settlement process available. </li></ul><ul><li>Origins with GATT </li></ul>
Principles of the Trading System 1. Most Favoured Nation 2. National Treatment 3. Freerer Trade 4. Predictability 5. Promoting Fair Competition 6. Encouraging Development & Economic Reform
The Case for Open Trade <ul><li>Tariffs on industrial products have steeply fallen and no average less than 5% in industrial countries </li></ul><ul><li>During the first 25 years after the war, world economic growth averaged about 5% per year. World trade grew 8%. </li></ul><ul><li>All countries have assets they can employ to produce goods and services for domestic and international markets. </li></ul><ul><li>Principle of comparative advantage – concentrate on the best </li></ul><ul><li>Liberal trade policies sharpen competition, motivate innovation and breed success. </li></ul>
How Decisions are Made <ul><li>Decisions of the WTO are made through negotiations between the member states. </li></ul><ul><li>Ministers or ambassadors conduct the negotiations. </li></ul><ul><li>Members countries come from all political and economic stripes. </li></ul>
<ul><li>Agreement between Canada, USA and Mexico </li></ul><ul><li>Came into affect on January 1, 1994 </li></ul><ul><li>By purchasing power parity GDP it is the largest trading bloc. </li></ul><ul><li>Resulted in the immediate elimination of most tariffs. </li></ul><ul><li>There are provisions for trade dispute resolution. </li></ul>
Chapter 11 – allows corporations or individuals to sue countries for compensation when actions taken by those governments adversely affect their investments. Once an item has been sold as a commodity, governments cannot stop its sale in the future. Most foreign investment in Canada is in the form of company take over (98%) Massive deindustrialization has occurred in the US and Canada.
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