Lecture 1

Question 1

What is the WTO?

Answer 1

A set of rules and conduct of the international trade of goods and services, and for intellectual properly rights

Question 2

What is the Modern World Trading System?

Answer 2

An overlapping network of international agreements that establish rules for trade of goods and services under the umbrella of the WTO

Question 3

What were the findings of Bown and Irwin regarding tarrifs and high income countries?

Answer 3

Found that amongst high income countries, tariffs have dropped from 25% in 1947 to almost 0 today.

Question 4

Between 1974 to 2004, how much have ocean freight costs dropped by?

Answer 4

Ocean freight rates have dropped from 10% in 1974 to about 6% in 2004 - shows that transportation costs create less friction in the long term.

Question 5

What are global value chains?

Answer 5

This is the phenomenon in which you see parts of the production process broken down and conducted in different parts of the world.

Question 6

What are backward linkages?

Answer 6

This is where you want to capture the extent to which a country is dependent on foreign inputs for its exports.

Question 7

How do you look to measure backward linkages?

Answer 7

Import content of exports.

(Foreign Value added/gross inputs) X 100%

Question 8

How did China’s trade grow versus the rest of the world upon its ascension to the WTO?

Answer 8

Saw their trade grew from 810% vs 180% for overall trade.

Question 9

What did Handley and Limao find as it relates to certainty and Chinese export value?

Answer 9

One third of Chinese export value to US was due to the certainty over future tariffs (reduced threat of trade war) due to the WTO ascension (2000-2005).

Question 10

What percent of Chinese exports between 2000-2004 originated from foreign invested enterprises?

Answer 10

Roughly half, shows that private forms have become a dominant force here

(Corsetti, Crowley, Han and Song)

Question 11

What are challenges facing the WTO (there are 5)?

Answer 11

1) latecomers problem
2) Rules of no state aid are not accomodating of state backed capitalism
3) Political economy of trade agreements are changing with global value chains
4) Concerns around soveriegty and control of domestic policy
5) Climate chnage and the resource cost of trade must be addressed.