Lecture 12: Politics of Trade - Current Debates Benjamin Graham Lecture 10: Trade and Development Benjamin Graham

Today’s Plan Housekeeping Reading quiz Tariffs vs. Quotas vs. Subsidies vs. Dumping Understanding public opinion Group exercise Lecture 10: Trade and Development Benjamin Graham

Housekeeping Why start with supply and demand? Midterm is a week from Friday (September 29) Homework 2 is due a week from today (September 27) Midterm study guide is posted Homework 2 is posted Why start with supply and demand? Benjamin Graham

Question 1 Which important country was not part of the TPP negotiations? China Japan Mexico Canada China, Mexico, and Canada were all excluded IR 213: Introduction Benjamin Graham

Reading Quiz (2) Trade Adjustment Assistance: A. Less generous than traditional unemployment B. Only lasts for 8 weeks C. Is the “Cadillac of retraining programs” D. Includes welfare payments for the rest of worker’s life Lecture 6: Barriers to Trade Benjamin Graham

Reading Quiz (3) What type of benefits are included in Trade Adjustment Assistance: A. Cover your moving costs to go take a new job B. Pay for you to go back to school in selected fields C. Both A & B D. Neither A nor B Lecture 6: Barriers to Trade Benjamin Graham

The Midterm Exam Key Terms, Short Answer, Mini-Essay Key terms: Definition: 1 sentence. Relevance: 1-3 sentences Example: 1-3 sentences Short Answer: 1 sentence is all it takes, sometimes just 1 word. Mini-Essay: 3-6 Sentences. There will be multiple points we’re looking for Lecture 11: Midterm Review Benjamin Graham

Recommendations Study in groups Divide questions - write up correct answers to every question Attend to cognitive diversity Lecture 11: Midterm Review Benjamin Graham

How Tariffs and Quotas Work (review) Lecture 7: Domestic Politics of Trade Benjamin Graham

How Subsidies work (review) Lecture 7: Domestic Politics of Trade Benjamin Graham

How Dumping Works Lecture 7: Domestic Politics of Trade Benjamin Graham

Checking Understanding If Chinese producers dump cheap car axels into the U.S. market, which groups are harmed? A. U.S. axel makers B. U.S. car makers C. U.S. car buyers (consumers) D. U.S. taxpayers E. C & D F. A & B Lecture 6: Barriers to Trade Benjamin Graham

Global Opinion on Trade According to a report from the Pew Research Center (pre-2016 election cycle), 66% of people in developing countries say increased trade leads to local job creation and 55% say it increases their wages. Only 20% of Americans say trade creates more jobs at home, and 17% say it leads to bigger paychecks. What could explain this? A. Poor people are more optimistic responding to surveys B. Governments in developing countries mislead the public C. Trade has different effects on employment in poor countries and rich countries Lecture 7: Domestic Politics of Trade Benjamin Graham

Global Opinion on Trade “According to a report from the Pew Research Center, 66% of people in developing countries say increased trade leads to local job creation and 55% say it increases their wages. Only 20% of Americans say trade creates more jobs at home, and 17% say it leads to bigger paychecks.” What could explain this? A. Poor people are more optimistic responding to surveys B. Governments in developing countries mislead the public C. Trade has different effects on employment in poor countries and rich countries Lecture 7: Domestic Politics of Trade Benjamin Graham

Global Opinion on Trade “Similarly, most people in Uganda (79%), Bangladesh (78%) and Lebanon (77%) say trade increases their wages. Even people in some larger economies such as China (61%) see global trade as a way to increase wages.” Why do I consider the phrase “even people in some larger economies…” to be poor journalism? A. The size of the economy isn’t what’s relevant here B. China has a large population but is not a large economy C. China shouldn’t be used as a proxy for all large, developing economies Lecture 7: Domestic Politics of Trade Benjamin Graham

Global Opinion on Trade “The poll found that most people around the world (81%) agree when asked if growing trade and business ties with other countries is good for their nation. Even 68% of Americans support that general idea.” Is it consistent for Americans to believe that trade costs jobs but is good for their nation? A. Yes B. No Why? Lecture 7: Domestic Politics of Trade Benjamin Graham

The Great Depression vs. the Great Recession The great depression caused (and was made worse by) a tariff war. During the global financial crisis, trade barriers increased slightly, but not much. Why the difference? Lecture 7: Domestic Politics of Trade Benjamin Graham

Why Did (Part of) the American Public Turn Against Trade? Benefits of trade have primarily gone to the wealth Also to urban centers on the coast Redistribution of the gains from trade is harder than we thought Republicans have traditionally favored free trade But red states weren’t benefitting that much Lecture 7: Domestic Politics of Trade Benjamin Graham

Why Did The TPP Fail? Trade agreements aren’t (only) about trade anymore They aren’t primarily about tariffs, subsidies, and quotas Non-tariff barriers Product safety rules, environmental rules, etc. Intellectual property rights Foreign direct investment dispute resolution Lecture 7: Domestic Politics of Trade Benjamin Graham

Some big think In groups, please write down at least one benefit and at least one cost of each of the following strategies. In each case, identify who is harmed (for the cost) and who is benefitted (for the benefit) Total trade openness (i.e. removal of all tariffs, quotas, and subsidies) Subsidizing/protecting key industries Big government safety net (i.e. unemployment insurance, job retraining, welfare, social security, government healthcare, etc.) Lecture 7: Domestic Politics of Trade Benjamin Graham