[...]... 30 Chapter 6: The Political Economy of International Trade Anti-Dumping Actions • The WTO is encouraging members to strengthen the regulations governing the imposition of antidumping duties Protectionism in Agriculture • The WTO is concerned with the high level of tariffs and subsidies in the agricultural sector of many economies 6 - 31 Chapter 6: The Political Economy of International Trade Protecting... further 6 - 23 Chapter 6: The Political Economy of International Trade 1947-79: GATT, Trade Liberalization, and Economic Growth • After WWII, the U.S and other nations realized the value of freer trade, and established the General Agreement on Tariffs and Trade (GATT) • The approach of GATT (a multilateral agreement to liberalize trade) was to gradually eliminate barriers to trade 6 - 24 Chapter 6: The. .. and investment in services • Outside, the WTO became a magnet for various groups protesting free trade 6 - 29 Chapter 6: The Political Economy of International Trade The Future: Unresolved Issues and the Doha Round •Three issues on the current agenda of the WTO are the rise of anti-dumping policies, the high level of protectionism in agriculture, and the lack of strong protection for intellectual property... 6: The Political Economy of International Trade DEVELOPMENT OF THE GLOBAL TRADING SYSTEM From Smith to the Great Depression • Up until the Great Depression of the 1930s, most countries had some degree of protectionism • In 1930, the U.S enacted the Smoot-Hawley tariff, which created significant import tariffs on foreign goods • Other nations took similar steps and as the depression deepened, world trade. ..Chapter 6: The Political Economy of International Trade Classroom Performance System A quota on trade imposed from the exporting country’s side is a(n) a) Voluntary export restraint b) Quota rent c) Local content requirement d) Administrative trade policy 6 - 11 Chapter 6: The Political Economy of International Trade THE CASE FOR GOVERNMENT INTERVENTION There are two types of arguments for government... intervention: political and economic • Political arguments are concerned with protecting the interests of certain groups within a nation (normally producers), often at the expense of other groups (normally consumers) • Economic arguments are typically concerned with boosting the overall wealth of a nation (to the benefit of all, both producers and consumers) 6 - 12 Chapter 6: The Political Economy of International. .. mechanisms would make the WTO a more effective policeman of the global trade rules • The WTO encompassed GATT along with two sisters organizations, the General Agreement on Trade in Services (GATS) and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) 6 - 26 Chapter 6: The Political Economy of International Trade WTO: Experience to Date • Since its establishment, the WTO has emerged... Political Economy of International Trade A New Round of Talks: Doha • In late 2001, the WTO launched a new round of talks at Doha, Qatar • The agenda includes cutting tariffs on industrial goods and services, phasing out subsidies to agricultural producers, reducing barriers to cross-border investment, and limiting the use of anti-dumping laws 6 - 33 Chapter 6: The Political Economy of International Trade. .. market than it would otherwise • All of these can raise the firm’s costs above the level that could be achieved in a world without trade barriers 6 - 35 Chapter 6: The Political Economy of International Trade Policy Implications • International firms have an incentive to lobby for free trade, and keep protectionist pressures from causing them to have to change strategies • While there may be short run... Classroom Performance System The main issues on the table at the Doha Round include all of the following except a) Anti-dumping policies b) Protectionism in agriculture c) Intellectual property rights d) Infant industry protection 6 - 34 Chapter 6: The Political Economy of International Trade IMPLICATIONS FOR MANAGERS Trade Barriers and Firm Strategy • Trade barriers raise the cost of exporting products to . boosting the overall wealth of a nation (to the benefit of all, both producers and consumers) 6 - 13 Chapter 6: The Political Economy of International Trade Political Arguments for Intervention Political. Administrative trade policy 6 - 12 Chapter 6: The Political Economy of International Trade THE CASE FOR GOVERNMENT INTERVENTION There are two types of arguments for government intervention: political. politically important groups. 6 - 4 Chapter 6: The Political Economy of International Trade INSTRUMENTS OF TRADE POLICY There are seven main instruments of trade policy: • Tariffs • Subsidies •