Why the wto and how it works why international

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Unformatted text preview: nternational institutions on trade? • But how can you get countries to agree to maintain low trade barriers? Create reciprocal agreements 3/9/2014 Page: 8 Providing opportunities for exporters Will give rise to a supporting lobby GUY SHANI , 2014 - STRATEGY 310 - THE WORLD ECONOMY - SESSION 10 4 1. Why the WTO and how it works History of GATT and WTO Bretton woods conference in 1944 Creation of institutions for a new economic order Promote development Did not come into effect 3/9/2014 Page: 9 Prevent crises GUY SHANI , 2014 - STRATEGY 310 - THE WORLD ECONOMY - SESSION 10 1. Why the WTO and how it works The success of GATT / WTO Round Year Name Nations 1 Geneva 23 2 1949 Annecy 13 3 1951 Torquay 38 4 1956 Geneva 26 5 1960-61 Dillon 26 6 1964-67 Kennedy 62 7 1973-79 Tokyo 102 8 1986-94 Uruguay 123 9 GATT becomes WTO 1947 2001 Doha 141 Overall trend of tariff reductions • Developing economies are slowly matching the levels of tariffs among advanced economies 3/9/2014 Page: 10 GUY SHANI , 2014 - STRATEGY 310 - THE WORLD ECONOMY - SESSION 10 5 1. Why the WTO and how it works How the WTO works • How does the WTO achieve trade liberalization? 3/9/2014 Page: 11 GUY SHANI , 2014 - STRATEGY 310 - THE WORLD ECONOMY - SESSION 10 1. Why the WTO and how it works Three principles of the WTO 1. Reciprocity Mutual reduction of trade barriers 2. Nondiscrimination All foreign products treated alike (a.k.a. Most favored nation or normal trade relations) 3. National treatment Same treatment to all products irrespective of national origin once inside the country 3/9/2014 Page: 12 e.g., different test scores required from applicants from different countries e.g., different rules to grade international students already here at Ross GUY SHANI , 2014 - STRATEGY 310 - THE WORLD ECONOMY - SESSION 10 6 1. Why the WTO and how it works WTO and China tariffs on cars The WTO issued a preliminary ruling against China on Feb. 13, 2008: China imposes: a. 10% import tariff on foreign made auto parts b. 25% tariff on imported passenger cars China enacted a local content requirement: • If domestically produced cars have more than 40% imported parts, the imported parts are subject to the higher tariff (25%) 1. China violated the national treatment principle, because the imported auto parts are not treated the s...
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This note was uploaded on 04/02/2014 for the course STRATEGY 310 taught by Professor Staff during the Winter '08 term at University of Michigan.

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