Free Trade vs Fair Trade

Сентябрь 10, 2022

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Free Trade vs Fair Trade

Содержание

2. Why trade? Specialization and economies of scale in production lead to greater quantity of production in
3. NAFTA Free trade Elimination of tariff, gradual in some cases Exceptions Free capital movements/investment ==================== Rationales
4. Concerns Economic Disparities Environmental concerns Labor concerns Inequalities
5. Why free trade may not be fair: Limited potentials for trade in the developing world Winners
6. Has NAFTA been successful? Economic growth Income inequality and poverty reduction Economic stability Immigration Has NAFTA
7. Perils of Free Trade Transitional job losses (unemployment) Lower incomes for some Loss of tariff income
8. Where are we now? From GATT rounds (ending with the Uruguay Round) to WTO 1994 The
9. What to do? Treating developing countries differently Developed countries should do something about their agriculture subsidies
10. Fair Trade for Developing Countries The “most favored nation” principle should not be used as a
11. Agriculture The industrial world should stop or significantly reduce its agricultural subsidies, especially on those crops
12. Tariff Policies Do not punish developing countries for attempting to increase the value added of there
13. Non-Tariff Barriers Technical barriers: safety, standards, etc. Rules of origin Tendencies toward bilateral trade agreements; such
14. Unskilled Labor and Immigration Developed countries should open up their markets to low-skilled services of developing
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Слайд 2

Why trade?
Specialization and economies of scale in production lead to greater

quantity of production in all trading countries and thus increased incomes and higher standard of living (economic welfare)
International trade and international economic interdependence may reduce tensions and promote peace among nations of the world

Слайд 3

NAFTA
Free trade
Elimination of tariff, gradual in some cases
Exceptions
Free capital movements/investment
====================
Rationales

Stability
Economic prosperities for all parties
Will reduce illegal immigration

Слайд 4

Concerns
Economic Disparities
Environmental concerns
Labor concerns
Inequalities

Слайд 5

Why free trade may not be fair:
Limited potentials for trade in

the developing world
Winners and losers in both developed and developing countries
The mismatches
Tastes
Regulations
Standards
Cultures
Economic and social institutions
Etc.

Слайд 6

Has NAFTA been successful?
Economic growth
Income inequality and poverty reduction

Economic stability
Immigration
Has NAFTA resulted in real “free trade?”
Some non-tariff barriers have survived
The corn and tomato story
The maquiladoras
The emergence of China

Слайд 7

Perils of Free Trade
Transitional job losses (unemployment)
Lower incomes for some

Loss of tariff income for some countries
Infant industries at risk: A need for protection
Imperfect capital markets
(Note: Some criticize protection of infant industries.)
Level playing field?
From developed countries perspective
From developing countries perspective
Dumping laws
There may be more losers and winners despite economic growth in some countries

Слайд 8

Where are we now?
From GATT rounds (ending with the Uruguay Round)

to WTO 1994
The rule of law in international trade
Still the powerful have more clout
Trade liberalization has favored the rich
Still developing countries pay more tariffs than industrial rich
Patent laws
Capital liberalization vs labor liberalization
Politics and the influence of special interests
The development rounds: From Doha (2001) to Cancun (2003) and Hong Kong (2005): not much accomplished

Слайд 9

What to do?
Treating developing countries differently
Developed countries should do something

about their agriculture subsidies
Remove escalating tariffs from processed agricultural goods
Liberalize unskilled-labor-intensive services
Liberalize labor migration
Reduction of non-tariff barriers
Safeguards and dumping duties

Слайд 10

Fair Trade for Developing Countries
The “most favored nation” principle should

not be used as a bargaining tool by developed countries
Extended market access; the European example
Give them a break on subsidies
Let them protect their new promising industries

Слайд 11

Agriculture
The industrial world should stop or significantly reduce its agricultural

subsidies, especially on those crops in which the developing countries may have a comparative advantage—e.g. cotton
Concentration of subsidies in the US
Fair market prices are would help efficient producers while the impact of slightly higher prices on consumers will be minimal

Слайд 12

Tariff Policies
Do not punish developing countries for attempting to increase

the value added of there exports by processing them: escalating tariffs; e.g., oranges vs. orange juice
The effective protection of processing could be much greater than the nominal tariff rate on a processed product
Do not abuse “safeguards” and “dumping” duties; there is need for an international tribunal to rule on trade violations

Слайд 13

Non-Tariff Barriers
Technical barriers: safety, standards, etc.
Rules of origin
Tendencies toward bilateral

trade agreements; such agreements should be restricted: It may be in the interest of large (powerful) countries to try to enter into trade agreement with individual countries – e.g., Chile Morocco, Peru

Слайд 14

Unskilled Labor and Immigration
Developed countries should open up their markets

to low-skilled services of developing countries: trucking, shipping, etc.
The rich countries’ capital chases the cheap labor in developing countries. Why not liberalize the movement of low-skilled labor as well so that such labor can go the countries where the is a shortage of such labor

Free Trade vs Fair Trade

Содержание

Why trade?Specialization and economies of scale in production lead to greater

NAFTAFree tradeElimination of tariff, gradual in some casesExceptions Free capital movements/investment ====================Rationales

Concerns Economic Disparities Environmental concerns Labor concernsInequalities

Why free trade may not be fair:Limited potentials for trade in

Has NAFTA been successful? Economic growth Income inequality and poverty reduction

Perils of Free Trade Transitional job losses (unemployment)Lower incomes for some

Where are we now?From GATT rounds (ending with the Uruguay Round)

What to do? Treating developing countries differentlyDeveloped countries should do something

Fair Trade for Developing Countries The “most favored nation” principle should

Agriculture The industrial world should stop or significantly reduce its agricultural

Tariff Policies Do not punish developing countries for attempting to increase

Non-Tariff BarriersTechnical barriers: safety, standards, etc.Rules of origin Tendencies toward bilateral

Unskilled Labor and Immigration Developed countries should open up their markets

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