1. World Trade & Globalization

2. Is world trade necessary? Uneven distribution of resources in the world World trade can rearrange the distribution. in the past 20 years, LDC share of world trade has halved, income per person has fallen in 59 countries and the number of people living on less than $1 a day has risen dramatically

3. Gini coefficient GC = 0 complete equality GC = 1 complete inequality

4. Gini coefficient

5. WTO Formed in 1995 The ten benefits (http://www.wto.org/english/thewto_e/whati s_e/10ben_e/10b00_e.htm)http://www.wto.org/english/thewto_e/whati s_e/10ben_e/10b00_e.htm 1. The system helps promote peace 2. Disputes are handled constructively 3. Rules make life easier for all 4. Freer trade cuts the costs of living 5. It provides more choice of products and qualities 6. Trade raises incomes 7. Trade stimulates economic growth 8. The basic principles make life more efficient 9. Governments are shielded from lobbying 10. The system encourages good governmentThe system helps promote peaceDisputes are handled constructivelyRules make life easier for allFreer trade cuts the costs of livingIt provides more choice of products and qualitiesTrade raises incomesTrade stimulates economic growthThe basic principles make life more efficientGovernments are shielded from lobbyingThe system encourages good government

6. Opposition of WTO Many LEDCs who feel that their concerns are largely ignored Environmental groups concerned about WTO policies Labour unions in MEDCs concerned the threat to their members as traditional manufacturing filters down to LEDCs + violations of workers rights in LEDCs

7. What are the impacts on local industries after China accession to WTO since 2001? some industries will be greatly hit TNCs will be keen to invest in China as there is a large market as China has to remove trade tariffs and barriers that have protected its economy for over 50 years. Tariffs on imported cars and parts will be cut. overseas competition many car factories are small and inefficient and may have to close down car-makers will have to reduce costs by 10-15% every year in order to compete car parts have to be bought from cheaper countries, e.g. Malaysia, Thailand some small- and medium plants may survive by merging / collaboration with big TNCs to carry out manufacturing production The retail market is likely to expand TNCs will be keen to invest in China as there is a large market Urban incomes are tempting. In 1998, urban incomes in Shanghai were 10 times higher than rural and increase 8.4% in the first 9 months of 2000 The rising income level means higher purchasing power WalMart, Carrefour, Metro and 5 of Japan s top retailers have ambitious expansion plans China is lifting restrictions on retailers, raising the prospect of competition for local stores, many of which are unused to competition

8. Regional trade agreements (RTA) European Union (EU) North American Free Trade Agreement (NAFTA) Association of Southeast Asian Nations (ASEAN)

9. Significance of RTA Can divert trade, inducing a country to import from a member of its trading bloc rather than from a cheaper supplier elsewhere. Raise barrier against each other, creating protectionist blocks Complicate the establishment of new global regulations

10. Trade blocs It is a group of countries that share trade agreements between each other

11. Why do the countries join trading blocs? Provide free-trade areas for members Reduce trade barriers Restrict international trade to non- members Share production techniques

12. Trade agreements in HK Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) Asia-Pacific Economic Cooperation (APEC) Organization for Economic Co- operation and Development (OECD)

13. CEPA covers 3 broad areas: Trade in goods - All goods of Hong Kong origin importing into the Mainland enjoy tariff free treatment, upon applications by local manufacturers and upon the CEPA rules of origin (ROOs) being agreed and met. Trade in goods Trade in services - Hong Kong service suppliers enjoy preferential treatment in entering into the Mainland market in various service areas. Professional bodies of Hong Kong and the regulatory authorities in the Mainland have also signed a number of agreements or arrangements on mutual recognition of professional qualification. Trade in servicesmutual recognition of professional qualification Trade and investment facilitation - Both sides agreed to enhance co-operation in various trade and investment facilitation areas to improve the overall business environment. Trade and investment facilitation

14. What is the significance of the trade agreement? Does it affect industrial locations? Does it help cost minimization? Does it foster globalization? Does it cause polarization of income?