Chapter 8 International Trade

Mercantilism

Realist belief that due to anarchic nature of the international system, each state must protect self interest over others, national interests/ goals relates with higher tariffs and is protectionist national interest/goals (protectionist regarding trade)

Economic liberalism

Liberal belief of cooperation and mutual gains to mutually benefit through economic exchange (limited with no govt interference) key word EFFICIENCY

Marxism

 IR theory of economic inequality, distribution of wealth between countries shapes political views, sees how core (wealthy) exploit the periphery (poor) = class struggle on world scale (ECONOMIC INEQUALITY)

Comparative advantage

principle that says states should specialize in the production of goods that have greatest relative efficiency and lowest relative cost ( ex: saudi and oil)

Bargaining space

Bargaining space is the range of possible agreements that both sides in a negotiation would prefer over conflict or no agreement

If each side has a minimum acceptable outcome, the overlap between those positions = the bargaining space.

If there is no overlap → war or no deal occurs

Equilibrium Price

Equilibrium price is the price at which supply equals demand — meaning neither a surplus nor a shortage exists.

• If global oil demand = 100 million barrels/day at $80 per barrel,
  and global supply = 100 million barrels/day at $80 per barrel,
  then $80 is the equilibrium price.

Balance of trade

 the value of states exports relative to its imports → trade surplus = positive balance of trade export more than import

Autarky

 when states attempt to be self reliant (isolation is usually harmful)

Example problems with autarky → Albania (very poor) tried to be self reliant China

NORTH KOREA

Protectionism

 Protection of domestic industries against international competition by trade, tariffs and other means. Policies that restrict or regulate international trade in order to protect domestic industries from foreign competition 

• Nontariff barriers: restricting imports in other ways than tariffs (ex: limiting the amount of a good)

• Economic nationalism: Belief that things in the home state are better (ex: grown local)

Dumping

selling goods in a foreign market for a lower price than market value → this is done to undercut competition, to capture market share abroad and to rid production surplus 

Intellectual Property Rights

Legal protections for creations of the mind → inventions, trademarks, copyrights and patents giving creators exclusive rights to use and profit from their work. IPRs often affect trade disputes, technology transfer and global innovation

Tariffs

Taxes imposed on imported goods to make them more expensive, used to protect domestic industries or raise government revenue - PROTECTIONISM

GATT General Agreement on Tariffs and Trade

1947 international agreement to create a regime of open trade by reducing tariffs and other barriers to trade. It served as the main framework for global trade rules and was replaced by the WTO in 1995

WTO World trade Org

Intrl. org that regulates global trade rules trade liberalization 1995 International organization that set  rules for global trade, resolving trade disputes, oversees trade agreements and promotes freer more predictable international commerce 

Regime

A regime is a set of rules, norms, principles, and decision-making procedures around which actors’ expectations converge in a particular issue area of international politics.

GSP Generalized System of Preferences

 trade program where developed countries give lower or zero tariffs to imports from developing countries to promote economic growth. 

Uruguay Round

A major set of global trade negotiations under GATT 1986-1994 key outcome: creation of WTO and major reduction in tariffs along with new rules for services, intellectual property and agriculture

set up global framework to add 100b to economy as tariffs went from 40%-3%

TRADE RESTRICTIONS ON MOST FAVORABLE WAS TRADE RESTRICTION TO ALL

Doha Round

A round of WTO trade negotiations aimed to lower trade barriers especially to benefit developing countries - largely stalled due to disagreements between developed and developing countries

NAFTA:North American Free Trade Agreement

 regional trade agreement (1994-2020) between the U.S. Mexico, Canada that reduced most tariffs and promoted trade & investment -> later replaced by USMCA

USMCA US, MEXICO, CANADA

U regional trade agreement between the U.S., Mexico, and Canada that replaced NAFTA in 2020. It governs trade, investment, labor, environmental standards, and digital commerce across North America.

OPEC Organization for Petroleum Exporting Countries

 a major cartel of major oil producing nations that coordinate oil production and pricing policies OPEC influenced global oil supply and prices

manipulates oil supply and prices, creates geopolitical dependency, hurts competing producers, slows economic diversification, and impedes global climate efforts.

Cartel

A group of producers that COLLUDE to control prices, limit production or divide markets to maximize profits EX: OPEC

Centrally planned economy

an economic system where the govt makes all major decisions regarding production, prices and distribution instead of the market EX: former Soviet union

Free trade

a system of which goods travel across borders without tariffs, quotas or barriers → associated with economic liberalism, global interdependence, lower prices and greater efficiency (argued that it can harm domestic industries or workers