INTB1205 Global/Regional Trade and Ethics in IB

Thomas L Friedman The World is Flat

the world is inevitably moving towards Globalization: business/cultural interactions expanding and serving more locations

Samuel P Huntington Clash of Civilizations

the world will be culturally divided and favor Localization: adjusting and accommodating to a specific market nearby

Semi-Globalization

Tension between globalization and localization

Specialization

the concentration of efforts and resources in the most suitable field for a firm/country; competitive goods/services

Non-Zero Sum

Relative win/win position; the size of the economy will increase so technically each section increases; everyone has a chance

Zero-Sum Position

increase of market size causes the rich countries to get richer at the expense of the poor; limited chance

Fair Market Value

whatever price someone is willing to pay

Infant Industry Policy

an industry should be protected until it can develop and be viable and competitive internationally

Strategic Trade Policy

government intervenes by limiting foreign involvement and supplying financial support in times of crises

National Security

defense industries, energy companies

Retaliation

passive-aggressive actions done back and forth, often snowballs (political intervention on free-trade)

Tariff

tax levied on imports

Subsidies

governmental payouts to domestic producers

Import Quotas

direct restrictions on quantity of importable goods

Voluntary Export Restraints least frequent

at request of importing country; quotas on trade by exporting country; purposefully asking for stagnation (US impose on Japan post WW2, learn to become competitive by less acquisition and US gets bases)

Local Content Requirements

some specific fraction of a good that must be produced domestically

Antidumping Duties

disallowing the selling goods in foreign market at below fair market value

Administrative Policies

bureaucratic rules that are designed to make difficult the entrance of imports into the country

General Agreement on Tariffs and Trade

liberalize trade and eliminate barriers; 1947, 8 rounds (Uruguay: services, intellectual property, and agricultural subsidies)

Protectionism

1929-1934: US and Global trade decreased by 2/3; xenophobia/poverty
2008: G-20 breaks non-protectionist policy pledge constantly

Smoot Hawley Tariff

After the 1929 stock market crash, President Hoover sharply increased already high tariffs on day-to-day imported items; Protectionism

Worlds Trade Organization

Offers recommendations/mechanisms for trade disputes; 1994: GATT and TRIPS; members are 98% of world trade,

Trade Related Aspects of Intellectual Property Rights

establishes minimum qualifications for intellectual property and maintain order and respect in trade/commodities/business

Regional Economic Integration

agreements between geographic-approximate countries to reduce/eliminate tariffs/barriers to free flow of goods, services, and factors of production within the trade network

Creation

company is included in new governmental territory and now has access to a lower-cost supplier

Diversion

company is included in new governmental territory and now has lost access to a preferable low-cost supplier because of trade/sourcing requirements

Free Trade Area

eliminates all barriers to trade of goods/services among member countries e.g NAFTA(3) and EFTA(4)

Customs Union

eliminates trade barriers, member countries adopt a common external trade policy e.g MERCOSUR

Common Market

eliminates trade barriers, common external trade policy, allows free movement of factors of production (Land Labor Capital Energy) e.g CARICOM and CACM

Economic Union

eliminates trade barriers, common external trade policy, allows free movement of factors of production, implementing common currency, harmonized tax rates, and common monetary/fiscal policy e.g EU(27)

Political Union

a central political authority coordinates economic, social, and foreign policy of member states e.g USA

Origins of the European Union

The World Wars; 1951 European Coal and Steel Community; 1957 Treaty of Rome|European Economic Community; 1986 Single European Act; 1993 Maastricht Treaty (euro)

EU Commission

proposes, implements, and monitors legislation

EU Council

ultimate controlling power

EU Parliament

debates <council<commission

Court of Justice

supreme appeals court (common law)

European Political Flow

1. Comm. proposes legislation
2. Cncl. Yes/No
3. Prlmt. debates and edits
4. Cncl. Law/No
5. Comm. monitors
6. Crt.Jus. EU court

Standardized Currency

+ $ comparison, administration
- sovereignty, optimal currency area, diff. reactions

Optimal Currency Area

similarities in underlying structure economic activity makes single currency adoption/exchange rate feasible

Instrument of Economic Activity

fiscal policy aimed to control or influence the market

Intellectual Property Rights (IPR)

rights afforded to the creators of artistic or technical creations

EU Experience

Established 1999, 2004 450mil. and single continental economy;
- xenophobia, Greek economy, Russian enlargement, BREXIT

BREXIT 2017

Article 50: Britain's right to secede from EU, De-integration

EFTA 1960

European Free Trade Association; Iceland, Liechtenstein, Norway, Switzerland and Portugal; Free Trade Area

NAFTA 1996

US Canada Mexico; Free Trade Area: tariffs, services, IPR, + environmental sanctions, punishment for improper environmental/health/safety/exploitive actions; integration and productivity increase

Mexican Perspective on NAFTA

+ job creation
- sovereignty, smuggled weapons

US and Canadian Perspective on NAFTA

+ large market, low consumer prices, production sites
- lost jobs, immigration, pollution

CACM 1960

Central American Community Market; Customs Market: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Dominican Republic

CAFTA 2004

Central American Free Trade Agreement; Free Trade Agreement; CACM + US

CARICOM 1973

Caribbean Community; Customs Market; 15 full, 5 assoc., 8 obs.; English-speaking Caribbean states

Andean Pact 1990

Free Trade Agreement; Bolivia, Columbia, Ecuador, Peru + MERCOSUR

MERCOSUR

Mercado Común del Sur; Customs Union; Brazil, Argentina, Paraguay, Uruguay, and Venezuela*

ASEAN 1967

Association of Southeast Asian Nations; free trade and industrial policy; Brunei, Indonesia, Malaysia, Phillipines, Singapore, Thailand, Vietnam, Myanmar, Laos, and Cambodia

AFTA 2003

ASEAN Free Trade Area; reduce import tariffs; 2010 +China

African Trade Blocs

17; African Continental Free Trade Agreement 44/54 members; struggle for viability, fear of foreign competition

Economic Contagion

a small, negative occurence that initially affects one market/country that spreads and infects other economies, e.g 2008 recession

Economic Integration

occurs when two or more nations assimilate their financial systems; concerns about culture and burdening

Free-Trade Theory

increasing slice of the pie for everyone

Globalization's Affect on Quality of Life

business conquests overlook human value for profit; job safety, sovereignty, skills, bargaining power

Distributive Fairness

judged by the final allocation of resources

Procedural Fairness

judged by the methodology used to determine resource allocation

Equality Rule

equal shares for all

Equity Rule

distribution proportional to contribution

Needs-based Rule

welfare-based allocation

Outsourcing

obtain (goods or a service) from an external supplier; worker's rights, job security, protectionism, cost factors

Poverty

1.3B people live on <$3 daily, illiterate, health, sanitation

TransFair

build a more equitable/sustainable model of international trade benefiting producers, consumers, industry and the earth; producers send in documentation to sustain the transparency

Fair Trade Route

Example: small producer ➡️ middlemen ➡️

Corporate Social Responsibility

tends to be a guise for capitalist efforts instead of a genuine corporate-shared moral