Chap 4 : trade cooperation through IO Flashcards
What are the 2 main models of trade?
- Liberal model of trade (derived from Ricardo)
- Mercantalism model of trade
Who are the winners from protectionism?
- Import-competiting producers
- Goverment itself (tariffs = tax revenue)
Who are the losers from protectionism?
- Consumers
- Some producers (using cheap foreign inputs in their production).
- Exported-oriented firms exposed to retaliation by foreign government
What are strategies used by IO to promote trade cooperation (and overcome difficulties)?
- Change the payoff structure/issue linkage
- Reciprocity
- Higher defection costs
- Longer time horizon (shadow of the future) and repeated play.
What are the 3 striking features of the WTO trade negociations?
- Each successive round takes a lot longer to complete
- The list of issues covered is becoming much larger
- Number of countries in “the game” goes up
What is the major change since the begining of the WTO rounds of negociation?
The rise of developing countries
What are the key characteristics of the WTO?
- Multilateral structure with permanant membership.
- Decision making by concensus (one country = one vote).
- Regulation on all aspects (not only tariffs).
- Trade policy review of each members (on a regular basis).
- Dispute settlement mecanism.
What are the NORMS of the WTO?
- Market liberalism and comparative advantage.
- Non discrimination (MFN and national treatment clause).
- Transparency
What are the RULES to apply then norms?
- Most favored nations clause
- National treatment clause
- Dispute settlement
- Trade policy review.
What are the 2 main organs of the WTO?
- Ministerial Conference
- General Council (act as the DSB and traade policy review body).
What is the major challenge to the WTO?
- Dynamic of power relations within the WTO (ex USA vs Malta).
What is the realist interpretation of the power struggles within the WTO?
The shadow of power is more present than the shadow of law.
The WTO system is an “organized hypocrisy” (which refer to the idea of Krasner).
Shadow of power : What are the 2 determinants of invisible weighting?
- Relative size of your market
- Asymetrical concessions.
How are the effect of the WTO on trade?
- At the begining, in early liberalisation, the WTO had huge effect on trade flows.
- But theses effects decline over time, just as the effect of PTAs increase over time.
What are the main aspects of the DS mecanims?
- The mecanism kicks after a formal complaint as been filled.
- A panel of experts is established by the DS body. Theses experts draft their own report,
- Then, the important thing is that these reports have to be adopted by the DS body.
- If the DS body adopts the reports, the remedies proposed in the report has to be implemented. And if there is no implementation, the DS body authorizes the complainer to retaliate (by raising tariffs..).
