Week 3 Flashcards
(26 cards)
Arguments for not engaging in free trade
- Protect and develop infant industries to promote socio-economic development
- There are always losers from free trade - implies political pressure for protection
- Protect own industries (especially in times of crisis)
To ensure commitment from all participating states, they need to
- Create shared rules, mechanisms for monitoring, information and possibly enforcement
- Create perspective of continuing cooperation, enhance predictability and build trust
- Discipline individual incentives NOT to cooperate so as to ensure collective gain
Typical forms of regional or bilateral agreements
- Free Trade Agreement
- Customs Union
- Common market
Free trade agreement
- No tariffs or quantitative restrictions between members
- Separate management of relations with non-members
Customs Union
- No tariffs or quantitative restrictions between members
- Common external trade policy
Common market
Customs union plus:
- Free movement of factors of production (labor, capital)
- Work towards overcoming differences in regulation
Basic principles WTO
- Most favored nation: advantage granted to one shall be granted to all contracting parties
- National treatment: After entering the territory, imports must be treated like domestic products
Legislations
binding rules, which are unambiguous about prescribed conduct, while independent authority interprets and implements the rules.
Main agreements WTO
- General Agreement on Tariffs and Trade (GATT) (on trade in goods)
- General Agreement on Trade in Services (GATS)
- Trade-related Aspect of Intellectual Property Rights (TRIPs)
How WTO dispute settlements proceed
- Stage 1: Consultations between parties to dispute
- Stage 2: Panel stage- panel of experts
- Stage 3: appeal - Permanent Appellate Body
- Stage 4: enforcement - countermeasures, if necessary
Evolution EU’s single market intergovernmentalist perspective
Member states in driver’s seat, both when slowing down and when accelerating integration
Evolution EU’s single market neo functionalist perspective
- Central role of an activist European Commission in relaunching market integration
- Qualified majority voting facilitates success
Negative integration
eliminating barriers to cooperation
Positive integration
develop common policies
Mutual recognition as a tool of integration
If a good respects all relevant regulations in one member state, all others recognize this as valid and sufficient for sale on their markets.
Positives of trade
- It allows companies to find new customers by expanding in overseas markets;
- It creates well-functioning supply chains;
- It increases competition between companies and countries;
- It allows for consumers to have more choices in the goods and services they buy
and to buy these foods and services more cheaply.
Adam Smith argument for free trade
Argued that the wealth of the nations increases if market barriers are removed
and people are left to pursue their bartering and trading.
Mercantilism
System of economic control, by promoting export and hindering imports.
Import-substitution-Industrialization
A more modern variation of mercantilism argued that self-sufficiency is necessary to help promote development in poor countries.
Creative destruction
When some jobs are destroyed by trade, others may be created
Dumping
Selling below the cost, ensuring economic loss.
Beggar-Thy-Neighbor Policies
Economic and trade policies that a country enacts that end up adversely affecting its neighbors and/or trading partners.
The GATT
The GATT was an agreement that sought to liberalize world trade by promoting open,
nondiscriminatory trade, mainly through rounds of negotiations that pursued reductions in tariffs.
3 ways in which international bureaucracies influence their member states and other political actors:
(1) Cognitive Influence: Changing knowledge and belief system;
(2) Normative Influence: Impacting norm-building on specific issues;
(3) Executive Influence: Assisting country efforts that impacts interests
