© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 2 International Trade Frameworks and Policy

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Historical Dimension The rise and fall of the Roman Empire and the emergence of feudalism can be attributed to trade

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Historical Dimension The principal approaches used to implement this emphasis was the Pax Romana, or the “Roman Peace,” and the common coinage

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Historical Dimension The Smoot-Hawley Act raised import duties to reduce the volume of imports into the United States to help restore domestic employment

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Historical Dimension Global division After 1945, the world was split into West and East With Soviet Union as the leader of the Eastern bloc and the United States for the Western world

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Historical Dimension Global division The charter for an International Trade Organization (ITO), a series of agreements among 53 countries, was signed in 1948 It was designed to cover:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Historical Dimension Global division The General Agreement on Tariffs and Trade (GATT) was initiated in 1947 The World Bank and the International Monetary Fund were created

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade General Agreement on Tariffs and Trade (GATT)

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade World Trade Organization (WTO) Created in _______ Responsible for:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade The Doha Round was initiated to:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade International Monetary Fund (IMF) Developed in ___ Designed to provide ____________

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade World Bank Also recognized as the International Bank for Reconstruction and Development, was formed in ____ Key functions:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade World Bank Current areas of focus:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade World Bank Major challenge -

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade Regional institutions European Coal and Steel Community – Customs unions - European Union (EU) -

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Institutions Affecting World Trade Regional institutions North American Free Trade Agreement (NAFTA), MERCOSUR - Latin America, and Gulf Cooperation Council (GCC) - Transatlantic Business Dialogue (TBD)

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Trade Positions Compared International trade positions have changed substantially when measured in terms of _______________ The ____ share of total world export has declined precipitously since 1950s An important development is the rise of __________

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Trade Positions Compared Factors behind the decline in U.S. international competitiveness: Perception within the U.S. private sector about international marketing being risky and complicated

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Impact of Trade and Investment The effect of trade – Export is important as it:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Impact of Trade and Investment The effect of trade – Importance of imports:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Impact of Trade and Investment The effect of international investment Foreign direct investment is extensive in many U.S. industries Almost one in seven U.S. manufacturing employees works for a ____________

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Impact of Trade and Investment Even though theory suggests an open investment policy that welcomes foreign corporations, some degree of uneasiness exists about the rapid growth of such investment

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Impact of Trade and Investment Restriction on investments may:

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Policy Responses to Trade Problems Have consisted mainly of political ad hoc reactions, which over the years have changed to protectionism Voluntary import restrictions

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Policy Responses to Trade Problems Non-tariff barriers

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Policy Responses to Trade Problems Export promotion efforts Earn foreign currency, encourage domestic employment, and increase domestic economic activity Offering mixed aid credits

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Policy Responses to Trade Problems Formation of export consortia

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Strategic Outlook for Trade and Investment Policies A U.S. perspective Improve the quality and amount of information government and business share to facilitate competitiveness Overcome its export reluctance and its short- term financial orientation Invest in its people, providing education and training suited to the competitive challenges

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Strategic Outlook for Trade and Investment Policies Closer government–business collaboration is seen as one key to enhanced competitiveness

© 2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Strategic Outlook for Trade and Investment Policies An international perspective: Bilateral or multilateral trade and investment negotiations must continue Design new mechanisms to evaluate restraint measures