Paper 1 International Business

Paper 1 International Business - How are Recession, Global...

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How are Recession, Global Trade, and the Economy linked? By Julie Kluck November 28, 2011 Intertwined Global Trading Three powerhouse economies are intricately entwined in global trading. These three countries are: the United States of America, China, and the European Union (Euro-Zone). The United States is China’s largest importer of goods; where $450 billion worth of goods are moved between the two countries, and China is the United States’ largest buyer ( http://bottomline.msnbc.msn.com/_news/2011/11/14 ). The United States’ exports to China rose thirty-two percent in 2010 ( http://bottomline.msnbc.msn.com/_news/2011/11/14 ) . While the European Union is China’s second largest consumer market, the United States’ is the Euro-Zone’s largest exporter for goods ( http://bottomline.msnbc.msn.com/_news/2011/11/03 ) . The Euro-Zone and the United States economies are also linked through multiple ties. If one powerhouse fails, then all powerhouses will eventually fall; therefore, creating a ripple effect to all succeeding countries. It’s like that saying of, “You’re only as strong as your weakest link!” Reasons Affecting the Break Down of Economies There are three main reasons affecting the break down of the three superpowers’ economies. One, is that China is not “playing by the rules” of their free-trade pledges when they earned their 2001 membership into the World Trade Organization (WTO). Two, China does not protect foreign companies’ intellectual property and three, which is probably the most notable reason in the threat of a global recession, is that the European Union is falling deeper and deeper into the financial debt abyss.
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Not Playing By the Rules The Chinese empire has constantly wrangled itself out of several policies and regulations that they are required to abide by if they’re a member of the World Trade Organization. However, China feels that they are not inclined to play by the rules of the game of global trade because they did not play an active role in the writing of the rules. As quoted by Pan Sen, a deputy director-general at China’s Foreign Ministry ( http://bottomline.msnbc.msn.com/_news/2011/11/14 ) : “First we have to know whose rules we are talking about. If the rules are made collectively through agreement and China is a part of it, then China will abide by them. If the rules are decided by one or even several countries, China does not have the obligation to abide by that.” What China is forgetting, is that the rest of the globe has the same interests in mind. Each empire wants to profit for themselves and to play by their own rules, but what if all the different global rules do not coincide with each other. Where would that leave global trading? Each of the three powerhouse empires have to give a little in order to gain a little. A United States trade envoy has also accused China of increasing their economies position in
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This note was uploaded on 01/27/2012 for the course FIN 350 taught by Professor Alahassanediallo during the Fall '08 term at Eastern Michigan University.

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Paper 1 International Business - How are Recession, Global...

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