A topic of international trade theory

1. NAME WASIM SAJJAD
ROLL NO 17
BS-ECONOMICS
SEMESTER SIX(VI)

2. PRESENTATION :INTERNATIONAL
TRADE POLICY
TOPIC:HISTORY OF TRADE POLICY
Every Law or Theory survive till the death of his
Assumption . (WASI)

3. Every Law or Theory survive till the death of his
Assumption . (WASI)

4. Ideas about History of trade polices
History of trade policy
1) Tariff for revenue
2 ) mercontilism
3) comperative advantage
4) Britain: repeal of the Corn Laws (1846), turn to free trade
5) US: Hamilton and manufacturing/ the Republican tariff
6) The interwar trade collapse
7) Post WWII: the GATT and gradual liberalization
8) European integration
9) De-colonization and import-substituting industrialization
10) The Washington Consensus
11) strategic trade policy

5. Tariff for revenue
WHAT
This idea of trade policy was focuse on to get maximum benefit from trade is to charge the
tariff on trade for revenue.
In this idea a nation charge imports and export tariff for the revenue of the govt.
This was the first idea on trade policy that every nation adopted as considring the best policy for
trade

6. WHEN
This idea of trade policy is still Applied to get benefit and to collect the revenue for the govt.
tariff was collected by :
USA in 1789 by Act
Britain started it about mid of 18th centure
Now a days is often used by underdeveloped contries
Tariff for revenue

7. WHY
This Ides considerd best on for following functions:
1) Revenue genrater
2)protection for industry
3)Consumer walfare/need with redistribution
Tariff for revenue

8. Case-History
USA imposed the tariff and got a good revenue from this idea.
1792 $4.4million
1850 $39.7million
1900 $233.2million
1950 $407 million
2000 $19914million
2010 $25298million
But the new ideas are taking its site.
Tariff for revenue

9. What
It was believed that national strength could be maximized by limiting imports via tariffs and
maximizing exports.
Corporations, politicians, and unions demand control over imports through higher-duties to
protect local jobs and industries, they are resorting to mercantilism
one nation's gain was another's loss.
Mercantilism

10. When
Gerard de Malynes (1586-1641)
Sir Thomas Mun (1571-1641)
John Maynard Keynes (1883-1946)
the view is still surviving
Mercantilism

11. Every nation protect his industry to export more .
Mostly imposed tariff on imports .
Every nation want to increase forign reserves by considring it a wealth .
Mercantilism

12. WHAT
This Concept in establishing trade policy is that a country should specialize
in producing and exporting only those goods and services which it can produce more efficiently (at
lower opportunity cost) than other goods and services (which it should import).
Comparative advantage

13. When
this idea was emerged in trade policy in 1817 by the Devid Ricardo in his book
*Principle of political economy*.
Comparative advantage

14. Case history
In 1995, US and UK trade with each other .the trade cause the gain of both patner becaue the used to
export the good in which there opertunity cost is lower .
Comparative advantage

15. What
Free trade is a policy in international markets in which governments do not restrict imports or exports.
Free trade

16. When
. Britain: repeal of the Corn Laws (1846), turn to free trade
Still WTO and other organizations are working for free trade
Free trade

17. WHY
When there were shortage of corn and tariff also causes to inflence the price rise it turn the tariff off
and particpate for free trade.
Free trade

18. What
The Republican Party dominated American politics during the 1920s, with a firm grip on Congress
and the presidency
The Republicans attempted to promote economic growth with lower taxes and higher tariffs
They gave U.S. manufacturing companies trading advantages over foreign companies.
Republican tariff

19. When
1923 to 1929
Republican tariff

20. Why
The prosperity of the 1920s was caused in part by the adoption of new
technologies and improved mass-production methods.
The Republicans attempted to promote economic growth with lower taxes and
higher tariffs.
Republican tariff

21. What
A tariff so high that it makes an import prohibitivelyexpensive. A prohibitive tariff discourages imp
ortersfrom bringing goods into the country in the first placebecause they will be difficult to sell.
when
by the USA rpublician party 1929-32
Prohabitation

22. What
In the period of crash of trade a higher order tariff was imposed to protect the economies.
BY
the USA and other leading economies .
Interwar collaps policy

23. What
The General Agreement on Tariffs and Trade (GATT) was a multilateral
agreement regulating international trade
its purpose was the "substantial reduction of tariffs and other trade barriers
and the elimination of preferences, on a reciprocal and mutually advantageous
basis."
Gatt and Librilization

24. When and why
GATT was signed by 23 nations in Geneva on October 30, 1947 and took effect on January 1, 1948. It lasted until the signature
by 123 nations in Marrakesh on April 14, 1994 of the Uruguay Round Agreements, which established the World Trade
Organization (WTO) on January 1, 1995.
Trade Liberalization'
The removal or reduction of restrictions or barriers on the free exchange of goods between nations. This includes the removal or
reduction of both tariff (duties and surcharges) and non-tariff obstacles (like licensing rules, quotas and other requirements).
Gatt-WTO and Librilization

25. What
The Washington Consensus refers to a set of broadly free market economic ideas,
supported by prominent economists and international organizations, such as the IMF, the
World Bank, the EU and the US.
Essentially, the Washington consensus advocates, free trade, floating exchange rates, free
markets and macroeconomic stability.
The term Washington Consensus was coined in 1989 by English economist John
Williamson to refer to a set of 10 relatively specific economic policy prescriptions that he
considered constituted the "standard" reform package promoted for crisis-
wracked developing countries by Washington, D.C.–based institutions such as
the International Monetary Fund(IMF), World Bank, and the US Treasury Department.[
The Washington Consensus

26. Low government borrowing. Avoidance of large fiscal deficits relative to GDP
;Redirection of public spending from toward broad-based provision of key pro-growth,
pro-poor services like primary education, primary health care and infrastructure
investment
;Tax reform, broadening the tax base and adopting moderate marginal tax rates
;Interest rates that are market determined and positive (but moderate) in real
terms;Competitive exchange rates
;Trade liberalization
liberalization of inward foreign direct investment;
Privatization of state enterprises
;Deregulation: abolition of regulations that impede market entry or restrict
competition, except for those justified on safety, environmental and consumer
protection grounds, and prudential oversight of financial institutions;Legal security for
property rights.
The Washington Consensus

27. What
Strategic trade policy refers to trade policy that affects the outcome of
strategic interactions between firms in an actual or potential international oligopoly.
A main idea is that trade policies can raise domestic welfare by shifting profits from
foreign to domestic firms
this term is recently introduced in the policy in which a nation can make comparative advantage with other
nation b imposing temporary tariff or other trade agreement
Strategic trade policy

28. Strategic trade policy

29. Figure 1 shows the profits of each firm depending on whether or not each firm
enters. The game tree on the left illustrates profits if there is no intervention or ‘free trade’,
while the game tree on the right illustrates profits if Europe commits to pay a subsidy of 6
to Airbus in the event that it enters. The box diagrams show Boeing’s profit as the first
number in each cell, while the second number is the profit of Airbus
Strategic trade policy