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Poli Sci 2J03 - Jan 29, 2014

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McMaster University
Political Science
Robert O' Brien

Started on: 01/29/2014 C LASS N OTES FOR : 2J03 P OLI S CI McMaster University, Fall 2013 W EDNESDAY , JANUARY 29, Y Definitions - Trade - Barriers to trade Perspectives - Liberal, economic nationalist, critical Developments - Growth and protectionism o Different trends going on at the same time o Overall trend is towards more liberal trade at the same time with the persistence of protectionism in particular areas o Magnitude and impact  Large growth with an equally large impact on countries are the world  Growth and trade has been greater than the growth in countries’GEP  Of the overall growth trading with other people is a significant percentage; trade has become more important for each country in terms of its general economic health o TRENDS IN GROWTH  Geographic concentration in the West • The vast majority of trade is circulating amongst “rich” countries…  Composition (manufacturers to services) • Changing composition of trade • The most noticeable element has been a gradual shift from manufactured goods to services • Services are becoming more important as a trade object • Entertainment • Financial / legal services • Educational services, health etc. • These shadow the transformation of economies in advanced industrialized worlds from manufacturing to services.  Overtime the patterns have changed, most of the trade between the north and the south was commodities. North absorbing goods now from the south?  Rise in intra-industry trade • Trade between a particular industry • Cars producing and exporting cars to each other • The United States exporting Fords to Europe and Europe exporting Mercedes to the United States • Exchange the same kinds of products? Consumers differentiate products on the basis of taste! Increasing rise in this kind of trade due to different tastes  Rise in intra-firm trade • Trade between the same company Angie © McMaster University 1 Fall 2014 Started on: 01/29/2014 • Moving different parts of the production across the world  Rise of NICs • Newly Industrializing Countries and the growth of manufacturing in these countries. • LatinAmerican countries like Mexico and Brazil, EastAsian countries like South Korea and Taiwan, China. The rise of manufacturing industries in these countries has shifted some of the world trade to these countries as they make manufactured goods relatively cheaply.  New Protectionism • The old protectionism was basically tariffs, putting a tax on goods coming into the country. • In the 1800s and a good chunk of the 1900s, tariffs were good for countries to protect industries and to generate money • The GATT and WTO have been able to lower tariff levels, countries that still want to protect their industries have to think of new methods of protecting. o Quotas, subsidies, dumping and trade laws, administrative, etc. - Changing institutional structure o ITO (International Trade Organization) - after the WWII ended, the allies got together to think of making an institutional arrangement to govern’  TRADE SIDE  ITO was going to be set up, but it never saw the light of day! It was negotiated and agreed upon, but the Americans never entered into the ITO. Since theAmericans were not going to join, no one else was going to join.  Many felt that the ITO was not liberal enough, so it was not approved by congress. o GATT (GeneralAgreement on Tariffs and Trade)  Created in 1948~ agreement that will lower tariffs between them. Because the ITO failed, they get stuck with GATT.  Temporary agreement - a series of treaties that are constantly negotiating one treaty after another. Main goal was reducing tariffs and reducing tariffs on manufactured goods.  Limited reach (embedded liberalism) - It does not let the international commitment disrupt or disturb domestic programs.  Weak dispute settlement, it only covered manufactured goods, did not cover services, property rights and so on.  It set up some key principles as to how International Trade should be covered. • MFN (Non-Discrimination) - Principle was that if you gave a trade concession to ONE country, you should give the concession to all countries. • Reciprocity - if someone gives you a concession, you should give him or her a concession! The notion of give and take! • Transparency - If you are going to protect an industry, you should do it with tariffs and be open about what you are doing so that everyone else can see. • Multilateralism - trade policy should include a large number of countries. There should be a limited amount of bilateral and regional trade deals, but aspiring to global trade deals! o WTO (World Trade Organization - replaced in 1995)  WTO contrast with the GATT, built on what it was but different from the GATT. 2 Started on: 01/29/2014  Complete International Organization
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