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POL 4410: Week Five. Trade Treaties. Structure. Theories of Trade Treaties History of Global Trade Treaties Regional Trade Treaties. Trade Theories. Neoclassical Economic Theory Interest Group Theory Realist / Mercantilist Theory. AUTARKY. FREE TRADE. Cloth. Cloth. Soap. Soap.

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Pol 4410 week five
POL 4410: Week Five

  • Trade Treaties


Structure
Structure

  • Theories of Trade Treaties

  • History of Global Trade Treaties

  • Regional Trade Treaties


Trade theories
Trade Theories

  • Neoclassical Economic Theory

  • Interest Group Theory

  • Realist / Mercantilist Theory


Neoclassical theory

AUTARKY

FREE TRADE

Cloth

Cloth

Soap

Soap

Britain

Britain

16

24

0

4

Italy

Italy

0

3

2

8

TOTAL

TOTAL

24

19

8

6

Neoclassical Theory

  • Comparative Advantage vs. Absolute Advantage


Interest groups
Interest Groups

  • Losers from trade may try to block free trade and to impose tariffs.

  • ‘Protection for sale’

  • Treaties as commitment devices


Realism mercantilism
Realism / Mercantilism

  • States sign treaties for two reasons:(1) To bully other weaker states(2) Because treaties don’t matter


Types of trade policy
Types of Trade Policy

  • Unliateral Policy

  • Bilateral Deals

  • Multilateral Institutions


Trade treaties pre wwii
Trade Treaties pre-WWII

  • Cobden Chevalier in 1860

  • MFN

  • Reciprocal Trade Agreements Act in 1934


GATT

  • Founded in 1948 with 23 members

  • Based on reciprocity and MFN - many exceptions made

  • Series of rounds


WTO

  • Founded in 1995 with 76 members, now 149.

  • Has Dispute Settlement Body

  • Consensus and negotiations

  • EU / US trade disputes


European union
European Union

  • European Coal and Steel Community in 1951

  • European Economic Community in 1957

  • European Union in 1992

  • Tripartite structure: Commission, Council of Ministers, European Parliament


Nafta and cafta
NAFTA and CAFTA

  • 1994 NAFTA founded

  • Chapter 11 and Chapter 19

  • CAFTA signed 2005


Other regional treaties
Other regional treaties

  • Asia Pacific economic Cooperation group

  • Mercosur

  • Andean Pact

  • Australia-New Zealand


Lomborg anderson
Lomborg: Anderson

  • Static Gains: inter / intra industry

  • Dynamic Gains: knowledge; faster growth from imported capital goods

  • Why protectionism?

  • What reduces protectionism? Info; tech; foreign openness; trade agreements

  • Costs: social and environmental?


Anderson 2
Anderson (2)

  • 1) Free trade; (2) Doha + and APEC (MFN); (3) FTAs (non-MFN); (4) PTAs with ex-colonies.

  • Binding? ; MFN? ; Reciprocal?

  • Free trade = 2*(Doha) = 24 * (FTAA)

  • Trade diversion vs. trade augmentation

  • Bananas and trade diversion $1 / -$1 / -$13


Anderson 3
Anderson (3)

  • Gross effects versus net effects

  • Economic costs of reducing tariffs and subsidies.

  • Private and social costs. Concentrated costs and diffuse benefits

  • Poverty, environment, climate change, conflict


Pronk
Pronk

  • Positive effects of trade on other areas (poverty, health, environment) depend on ‘sustainability conditions’.

  • Trade policy and domestic policy interact

  • Gradualism vs. shock therapy. Sticky costs.

  • Is WTO actually slowing free trade? Two-track liberalization.


Bergstein
Bergstein

  • Bicycle must keep moving

  • Big is beautiful

  • Bulding blocks, not stumbling blocs

  • Money is central

  • Leadership is essential


Ruggie
Ruggie

  • What is ‘embedded liberalism?’

  • Power and purpose

  • Move from classical liberalism to neoliberalism


Wallace
Wallace

  • What is Europeanization? Magnetic / Heineken analogies.

  • Importance of history and goeography

  • Neofunctionalism

  • Multi-level governance

  • Territorial, Functional, Affiliational Integration

  • Multiple modes of interaction

  • Impact on domestic politics


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