Chap006 - Chapter 06 The Political Economy of International Trade The Political Economy of International Trade Learning objectives Describe the policy

Chap006 - Chapter 06 The Political Economy of International...

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Chapter 06 - The Political Economy of International Trade The Political Economy of International Trade Learning objectives Describe the policy instruments used by governments to influence international trade flows. Understand why governments sometimes intervene in international trade. Articulate the arguments against strategic trade policy. Describe the developments of the world trading system and the current trade issues. Explain the implications for managers of developments in the world trading system. This chapter focuses on the political systems and tools of trade policy. The major objective of this chapter is to describe how political realities shape the international trading system. With an introduction to tariffs, subsidies, and the development of the world trading system, the chapter describes the evolution of the World Trade Organization and its impact on the global business environment. While in theory many countries adhere to the free trade ideal outlined in Chapter 5, in practice most have been reluctant to engage in unrestricted free trade. The US continues to restrict trade in technological and militarily sensitive products as well as in textiles, sugar, and other basic products in response to domestic political pressures. 6-1 6
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Chapter 06 - The Political Economy of International Trade OUTLINE OF CHAPTER 6: THE POLITICAL ECONOMY OF INTERNATIONAL TRADE Opening Case: United States Cotton Subsidies and World Trade Introduction Instruments of Trade Policy Tariffs Subsidies Import Quotas and Voluntary Export Restraints Local Content Requirements Administrative Policies Antidumping Policies Country Focus: Subsidized Wheat Production in Japan Management Focus: U.S. Magnesium Seeks Protection The Case for Government Intervention Political Arguments for Intervention Economic Arguments for Intervention Country Focus: Trade in Hormone-Treated Beef The Revised Case for Free Trade Retaliation and Trade War Domestic Politics Development of the World Trading System From Smith to the Great Depression 1947–1979: GATT, Trade Liberalization, and Economic Growth/ 1980–1993: Protectionist Trend The Uruguay Round and the World Trade Organization WTO: Experience to Date The Future of the WTO: Unresolved Issues and the Doha Round Country Focus: Estimating the Gains from Trade for America Implications for Managers Trade Barriers and Firm Strategy Policy Implications 6-2
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Chapter 06 - The Political Economy of International Trade Chapter Summary Critical Thinking and Discussion Questions Closing Case: Trade in Textiles—Holding the Chinese Juggernaut in Check CLASSROOM DISCUSSION POINT Ask students whether the United States promotes free trade. Jot their responses on the board. Then try to dig a little deeper by asking why, if the United States promotes free trade, it still maintains some trade barriers (have some current trade barriers in mind such as the $3.4 billion in subsidies U.S. cotton farmers received in 2001). Write the responses of
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