Global, Regional and National Governance of Trade Flashcards
What are examples of national trade policies?
- Tariffs
- Subsidies
- Import quotas
- Administrative policies
- Local content requirements
- Anti-dumping measures
What is an example of a tariff?
Trump accusing China of unfair trading practices, both retaliated and imposed tariffs on each others’ goods
What is an example of a subsidy?
India sugar subsidy regime - Indian gov to provide 10,448 rupees of per tonne sugar exported
What is an example of an import quota?
EU-US beef import quota: 35,000 tonnes of beef imported from US, limits competition, a limit on the quantity that can be exported to a market
What are administrative policies?
Standards that have to be met to be accepted in countries, passporting loss after Brexit (passporting allows a firm registered in the EEA to bro business with any other EEA state without needing further authorisation from each country)
What are local content requirements?
Requirement of a certain % of goods used in production processes to be sourced from domestic manufacturers
e.g USMCA trade deal - foreign car manufactures to use local ports and produce locally
What are anti-dumping measures?
Protectionist tariff on foreign imports believed to be priced below fair market value.
e.g EU duties on e-bikes from China
What are motives for intervention?
- National security
- Health
- Re-election
- Trade deficit
- Boost domestic economy
- Please voters –> reduce unemployment –> self sufficiency
What is GATT in terms of international governance of trade?
General Agreement on Tariffs and Trade
Purpose is to promote international trade and remove barriers.
Governed world trade 1947-1995
What are the limitations of GATT?
- Products, not services
- Focus on tariff negotiation
- Agreements not binding: no enforcement or legal legitimacy
- Series of multilateral rounds (Uruguay Round 1986-1993)
- Minimal benefits for less developed countries
- Diverse membership with diverse political and economic interests
What is the World Trade Organisation (WTO) in terms of international governance of trade?
- Created in Uruguay round in 1995
- Role: enforcement and policy powers
- Forum for trade negotiations
- Handles disputes, monitors trade agreements
- Provides assistance to developing countries
- 150 members
How wide is the scope of world trade agreements?
Uruguay rounds = wide scope
- Opening up of previously closed industries
- Substantial reduction of tariffs and subsidies
- 1940s - present average tariffs declined 40%-4%
- Intellectual property and Investment
What are the principles the WTO’s trade approach?
- Countries should engage in negotiations to remove trade barreirs
- Countries are bound by the outcomes of trade negotiations
- ‘Unfair’ practices discouraged
Why is the WTO bad for developing nations?
Developing countries need some protectionism to develop new industries and diversify their economies
Infant industry argument: developed nations pulling away the ladder they used themselves to climb up
What are some other limitations of the WTO?
- Most favoured nation principle - idea that trade should be without discrimination - not good for local firms
- Failure to reduce tariffs on agriculture
- Ignores environmental considerations
What are regional trade agreements?
- Agreements between countries in a geographic region to provide access to their markets through tariff reduction
- Acceleration since 1990s
- Discriminate against non members
What are the benefits of regional integration?
- Reaps benefits of free trade
- Promotes stability and peace
- Strengthens individual countries by linking them together
What is the case against regional integration?
- Trade diversion
- Loss of national sovereignty
- Investment diversion - foreign investors viewing country as unattractive
What is trade creation?
A benefit of being in a customs union, change in the pattern of trade from a high cost domestic producer to a low cost procure inside the customs union
What is a customs union?
Where member states agree to trade freely between each other, but decide to impose a common external trade barriers on all imports coming from non member states
e.g EU
What is trade diversion?
Diverting trade from an efficient producer outside the customs union to an inefficient producer inside
What is a Free Trade Area?
Removal of trade restrictions between member states e.g NAFTA, EFTA, AFTA, China-Asean
What is a common market?
- Free movement of FOPs
- Common external trade policy towards non members
- Removal of trade restrictions
E.g Mercosur
Caricom
What are the characteristics of a customs union?
- Removal of trade restrictions within union
- Common external trade policy
E.g Ancom
What are the characteristics of an economic union?
- Harmonisation of economic policies
- Free movement of FOPs
- Common external trade policy towards non members
- Removal of trade restrictions
E.g EU
What is the European Union?
- 28 member states
- Single market
- Single currency Euro adopted by 19 members
What is the political structure of the EU?
European commissions at the top governing EU parliament and council of ministers who decide on EU law (court of justice), EU budgets (court of auditors)
What are the key uncertainties surrounding the EU?
Financial crisis
Brexit
Nationalist and populist movements
Immigration
What is an Indian example of local content requirements?
Single brand Indian retail stores must source 30% of the value of their goods from Indian retail firms
