International Trade History

Question 1

first steps to growth the market

Answer 1

establishing world trade routes, trade networks (between diverse culture)

Question 2

the mongols

Answer 2

Pax mongolica
Marco Polo
Silk route
Chnggis Khan : conquest the central of asia, included russia

Question 3

What happens during the 1600th century ?

Answer 3

emergence of a single global trade system
muslim traders dominated this system
Mesoamerican and Andean networks remained separate
European traders sought control from Europe but were not successful until 1750
mercantilims and triangular trade

Question 4

Main point of mercantilism

Answer 4

economic system practiced by European countries from around 1600 through the 1700’s.
It established patterns of trade that helped shape the colonies.

Question 5

The modern global trading system

Answer 5

Adam Smith to Great Depression
Britain adopts free trade in 1846
Smoot-Hawley act (US) 1930 aimed at employment protection one cause of the Great Depression
1947-1979: GATT, Trade Liberalization, Economic Growth
1980-1993: GATT needs fixing
Uruguay round of GATT negotiations (1986-1993)
Creation of WTO with powers to implement trade agreements

Question 6

GATT general fact

Answer 6

Pre-WWII protectionism
Smoot-Hawley +57% import tariffs (1930)
UK, France, Italy followed suit
world depression in ‘30s
Havana Conference (1947) -> GATT
125 countries by 1994
small staff in Geneva
tariffs fm 40% in ‘47 to 3% in ‘95
trade 15x to $6.75 trillion in ‘92
WTO superceded GATT in 1995

Question 7

beginning of GATT

Answer 7

General Agreement on Tariffs and Trade
Developed as part of the Havana, Cuba conference in 1947
Provided forum for trade ministers to discuss barriers to international trade

Question 8

The GATT

Answer 8

Established rules of conduct based on four key principles:
Trade barriers should be lowered and quotas eliminated
Nondiscrimination
Permanent* concessions without circumvention
Disputes settled by consultation, not unilateral action
Provided a forum of multilateral talks
Round I, Geneva, 1947

Question 9

the role of GATT

Answer 9

Goal: to promote a free and competitive international trading environment benefiting efficient producers
Accomplished by sponsoring multilateral negotiations to reduce tariffs, quotas, and other nontariff barriers

Question 10

What was the most favored nation principle stand for ?

Answer 10

Sought to ensure that international trade was conducted on a nondiscriminatory basis
Requires that any preferential treatment granted to one country must be extended to all countries
If the US cut the tariff on imports of British trucks to 20%, it also had to reduce tariffs on imported trucks from all other members to 20%

Question 11

The expection of the MFN principle

Answer 11

1.GSP (Generalized System of Preferences) for LDCs : Members permitted to lower tariffs to developing countries without lowering them for more developed countries
2.regional arrangements such as NAFTA

Question 12

general agreements on tariffs and trade

Answer 12

1. Tariff: GATT obligates each country to accord nondiscriminatory, most favored nation (MFN) treatment to all other contracting parties with respect to tariffs. MFN treatment does not mean free trade or national treatment. Imports from contracting parties are subject to tariffs or quotas. MFN treatment means that no other countries with some exceptions receive better treatment or lower tariffs.
2. Quantitative Restrictions (Quotas) : GATT in general prohibits the use of quantitative restrictions on imports and exports.

Question 13

WTO - World trade organisation

Answer 13

A rules-based, member-driven organization.
“Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.”
Created in 1995 by 120 nations to supersede and extend the GATT.
Now:
164 member nations (over 98% of world trade).
32 ‘observer’ countries.

Question 14

WTO genesis

Answer 14

WTO came into existence on 1.1.1995, precisely as a response to need for;
more effective regulatory, supervisory and enforcement environment for world trade & investment than the GATT could provide.
WTO’s aim- is to promote free trade and stimulate economic growth.
It is made up of a series of agreements and incorporates old GATT.
GATT only focused on trade in goods, WTO’s rules extended to include;
Intellectual Property, Investment, Services, Telecommunications and Financial services (banking).

Question 15

differnece between GATT and WTO

Answer 15

GATT : Ad hic and provisional, cnotracting parties, trade in goods, dispute based on consensus
WTO: pemrnanet and legal, members, trade in goods, services, trade and IPRS, faster, binding and permanent mechanism

Question 16

marrakesh agreement 1994

Answer 16

Marrakesh Agreement and WTO is sometimes referred to as a “tripod” in that it primarily addressed the following areas :
1.Trade in Goods—an Agreement on Agriculture and an Agreement on Textiles and Clothing
2.Trade in Services as specified in General Agreement on Trade in Services
3.Intellectual Property as specified in Agreement on Trade-Related Aspects of Intellectual Property Rights

Included a WTO charter :
1.Established WTO as a legal international organization
2.Stipulated that “WTO shall provide the common institutional framework for the conduct of trade relations among its members”
3.Defined the functions of WTO

Question 17

major WTO functions

Answer 17

-Administering WTO trade agreements
-Forum for trade negotiations
-Handling trading disputes
-monitoring national trade policies
-technical assitance and training for developing countries
-Cooperation with other international organizations

Question 18

Goods (GATT)

Answer 18

Agreement on Agriculture addresses three outstanding issues concerning international trade in agricultural goods

Question 19

Services (GATS)

Answer 19

Composes more than 50% of total world trade and has at times grown faster than trade in goods
General Agreement on Trade in Services (GATS)—significant outcome of Uruguay Round
Defined trade in services as occurring in one of four modes
Cross border trade
Movement of consumers
Foreign direct investment
Temporary movement of natural persons

Question 20

Intellectual property (TRIPS)

Answer 20

An asset in the form of rights conferred upon a product of invention or creation by a country’s legal system
Agreement on Trade-Related Aspects of Intellectual Property Rights
sets out obligations for members (copyrights, trademarks, geographical indications, industrial designs, patents and layout designs of integrated circuits
Citizens and firms in developed countries own most of the world’s IP
Developing countries currently often have less IP protection than developed countries
Raises cost of many goods and services to developing countries

Question 21

Disputes (disputes settlement)

Answer 21

If a member believes their rights under the agreements are being infringed, it should bring the case to the WTO—instead of acting unilaterally.

Initially, governments try to settle their differences through consultation.
If the case is not settled during the consultation period, a stage-by-stage procedure is initiated.
A panel of independent experts, judging each case based on interpretations of the agreements and individual countries’ commitments, makes the final ruling.
Governments can appeal after the final ruling

Question 22

GATT/WTO: main objective

Answer 22

To provide a legal framework for incorporating the results of negotiations directed toward

“reciprocal and mutually advantageous exchange of market access commitments on a non-discriminatory basis.”

Typically, such an outcome is obtained through reductions of tariffs and other barriers to trade.

Question 23

the two pillars of GATT/WTO Negotiations

Answer 23

Non-discrimination and reciprocity

Question 24

main criticism of WTO

Answer 24

1.When WTO was set up, the majority of developing countries were not at the table and were barely consulted. As a result, the WTO essentially protects MNCs based in the North and acts as a tool of rich and powerful countries - notably US, EU, Japan and Canada.
2.It does not rectify the multiple violations of the general principles of law which affect the dispute settlement mechanism.
3. Although majority of other WTO members are developing countries from Africa, Asia/Pacific and Latin America, many of them have little to say in decisions that are taken at WTO meetings. Don’t have enough to offer from an economic standpoint to have any real power. The influential nations in the WTO focus on their own commercial interests. They also claim that the issues of health, safety and environment are steadfastly ignored.
4. The AoA is criticized for reducing tariff protections for small farmers – a key source of income for developing countries – while allowing rich countries to continue to pay their farmers massive subsidies which developing countries cannot afford.

Question 25

some examples of managing global economy impartially are :

Answer 25

rich countries are able to maintain high import duties and quotas in certain products, blocking imports from developing countries (e.g. clothing);
the increase in non-tariff barriers such as anti-dumping measures allowed against developing countries;
the maintenance of high protection of agriculture in developed countries while developing ones are pressed to open their markets;
many developing countries do not have the capacity to follow the negotiations and participate actively in the Uruguay Round; and
The TRIPs agreement which limits developing countries from utilizing some technology that originates from abroad in their local systems

Question 26

others critiscims

Answer 26

The WTO undermines state sovereignty
It undermines representative democracy
Member nations are prevented from protecting the environment
Members are unable to uphold laws guaranteeing workers’ rights
The WTO is controlled by the larger nations
The WTO represents the interests of large corporations and wealthy citizens