MAR 4156 Lecture Notes - Lecture 2: World Trade Organization, Protectionism, General Agreement On Tariffs And Trade

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9 Jun 2016
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Trade barriers
Barriers to trade are one of the major issues confronting international marketers.
They. A. Be tariff or non tariff barriers
Countries continue to use non tariff barriers for a variety of reasons
World trade and US multinationals
Dominance of US multinationals in the 1950s and 1960s
Large investment by US companies in Europe and Latin America
Concern in Latin America resulting in expropriation of direct US investments
In Europe, there was strong public demand to limit foreign investment
Balance of trade
The balance of merchandise trade also reflected the changing role of the United States
in world trade.
Between 1888 and 1971, the United States had a favorable balance of trade
By 1971, the United States had a trade deficit of $2 billion that grew to at $160 billion in
1987
Trade deficit peaked in 2007, with the continued weakness in the US dollar.
The positive consequence of the global financial crisis in 2008 in the United States was
the halving of the US trade deficit during 2009 from its high in 2007
Balance of payments
Trade agreements remove barriers between regions
Receipts
oMerchandise export sales
oMoney spent by foreign tourists
oTransportation
Payments
oCost of goods imported
oNew overseas investments
Current account
Capital account
Reserves account
The current account is the account of primary interest to international business
Protectionism
Countries will protect their currency at all cost
WTO tried to exterminate this, but wasn't 100% effective
Countries use legal,mexchange, and psychological barriers to protect their local
markets.
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