All about WTO Predecessor to WTO: General Agreement on Tariffs and Trade (GATT) formed in 1946. It created a set of global rules that governed trade through (substantial reduction in tariff and other barriers AND to eliminate discrimination in international commerce) GATT weakness: Successful tariff reduction caused rise in use of non-tariff barriers AND Dispute resolution was non-binding

WTO came into existence on 1st Jan 1995 to promote free trade and stimulate economic growth

What is the WTO? Most powerful institutions in the world that sets rules for global trading system as well as dispute resolving 164 members with headquarters in Geneva, Switzerland MISSION: -WTO aims to increase international trade by promoting lower trade barriers and providing a platform for negotiation of trade & to their business.

Advantages Disadvantages NO Most Favored Nation (MFN) treatment → All members of WTO are treated the same

NO National Special treatment → locals and foreigners are treated equally

Promotes freer trade

Benefits of International Free Trade Exchange of goods through exports and imports with no government intervention to limit trade. Trade Liberalization (removing barriers) generates economic growth and development

Access to wider variety of goods and services= increased standard of living International competition = falling prices= households can buy more Build better relationships between countries= lower hostility Flow of innovative ideas and technologies between countries Increased access to raw materials More efficient firms to emerge= improved use of global resources Economic growth= Exports are key component of GDP Economic development= Lower levels of unemployment due to increased output

Limitations to Free Trade Countries limit free trade to protect themselves from certain outcomes… PROTECTIONISM through tariffs, subsidies, quotas and embargoes

Tariffs: Tax on imported goods and services that raises the selling price of it within the country. → Allows inefficient domestic firms to increase their production and market share → More efficient global competitors reduce output due to tariff= Increased domestic employment

Quota: Physical limit on imports Subsidies Embargoes

ARGUMENTS FOR PROTECTIONISM To protect infant industries and new firms that would be unlikely to succeed at start-ups due to level of global competition Sunset industries that are declining industries on verge of extinction can have limited economic damage with government support. Being reliant on industries such as energy, defense and agriculture creates vulnerability Dumping when foreign firms sell goods and services at extremely low prices that can create a monopolistic foreign entity in the country, harming its industries. Correct imbalance when imports are higher than exports then money supporting foreign firms is greater than entering to support domestic. Pressure to bring about changes when it comes to countries using cheap labor and low-cost environmentally damaging production

ARGUMENTS AGAINST PROTECTIONISM Reduces quantity and variety of goods and services available Reduces supply= higher prices Manufacturers that rely on imported raw materials face higher production cost= inflation Reduces need to be efficient and innovate= worsen quality of products Resource misallocation since wasted by less efficient domestic producers

Economic Integration Countries reduce trading barriers and become more interdependent through.. Trade agreements Creation of trading blocs Forming monetary unions

Trade Agreements: Preferential Trade Agreement: Between two or more countries providing better terms and conditions of trade to member countries. EG: Vietnam has preferential tariff rates with Australia

Bilateral trade Agreement: Preferential agreement to reduce and eliminate trade barriers. EG: Vietnam signed bilateral trade agreement with Korea in 2015

Regional Trade Agreement: Between two or more countries in the same geographical region. EG: Armenia and EU, EU-Armenia RTA in 2019

Multilateral trade Agreement: legally binding agreement between countries or trading blocs that is negotiated and overseen by WTO. EG: East Africa Community created in 2005

Trading Blocs: Group of countries together to reduce barriers to trade.Like Free Trade Areas (FTA), Customs Unions, Common Markets etc. Free Trade Areas: Bloc where countries agree to abolish trade restrictions between themselves but maintain their own restrictions

CUSMA: Mexico, Canada and the USA have a free trade agreement but can deal individually with Cuba as they see fit

Customs Unions: Members trade all goods and services tariff free and agree on common tariff rates on imports from all third party countries like the EU

Countries within the European Union trade freely between themselves and have common barriers with all third-party countries e.g. UK Common Markets: Same as Custom unions except 4 FOP’s flow freely (land, labor, capital and enterprise) to improve allocation of resources eg. EU

Monetary Unions: Members enjoy benefits of custom union and common market but also establish a common central bank with a common currency that controls monetary policy of member countries for EG, Eurozone.

All about the World Trade Organization (WTO) Established in 1995 to promote free trade to raise living standards and create jobs. It has two main roles in liberalizing trade Conferences to encourage elimination of protectionist trade barriers like the Doha Round Conferences Adjudicating bodies for trade disputes→ member states can file complaints and then there are hearings.

Trade Aid rade can be an engine for growth that lift many people out of poverty and helps an economy develop However many people face barriers that prevent them from benefiting from the world trading system Some of these barriers are in export and import markets which the Doha round of multilateral trade negotiations aims to reduce and eliminate. These include non-tariff barriers which are increasing in significance as well as traditional tariff barriers Internal barriers- lack of knowledge, excessive red tape (excessive regulation or rigid conformity to formal rules), inadequate financing, poor infrastructure can be just as difficult for exporters to overcome Aid for trade basically means targeting the exporter or "supply side" constraints in trade Aid for trade prefers developing nations specifically the least developed so that they play an active role in international trade and use trade as a factor for growth and poverty less severe Areas where aid for trade is needed- Trade policy and regulation (formulate trade policy, participate in negotiations and agreements) Economic infrastructure (investment in roads, ports, telecom, energy to export products to global market) Productive capacity building (better testing labs and supply chains for competitiveness in export markets) Adjustment assistance (helping with liberalization costs, decline in trade, tax) Case Studies

How should aid for trade work- Supply Side- Provide additional funding- aid for trade should not divert resources away from other development priorities, such as health and education Scale up trade expertise and capacity- trade and growth issues need to be better integrated in donors' aid programming. Trade expertise needs to be strengthened both in capitals and in country Demand Side- Make trade a priority- trade needs to be a bigger part of national development strategies. Aid for trade will only work if countries decide that trade is a priority Take ownership- countries need to determine their own aid for trade plans involving all stakeholders Focus on results-oriented "business plans"- aid for trade is an investment, not just a transfer. The questions is not only how much aid for trade is available, but whether it is effective and actually benefits developing countries Both supply and demand sector needs to- Improve cooperation Involve the private sector Improve transparency and accountability One objective (Important)- Ensuring that developing countries can harness trade to raise living standard, improve health and education, protect the environment, alleviate property and secure their development Uganda Coffee Sector Coffee is Uganda's largest agricultural export, contributing to over 20% of the country's foreign exchange earnings.There are challenges→ low productivity, poor quality, and limited access to international markets. - The Aid for Trade initiative aims to support developing countries in building their trade capacity and enhancing their ability to participate in global trade. Objective: To enhance the export competitiveness of Uganda's coffee sector by improving the quality and productivity of coffee production and facilitating market access for Ugandan coffee on the international market. Approach: Comprehensive approach→ working with all stakeholders in the coffee value chain, including farmers, processors, exporters, and government agencies. Supported the establishment of farmer organizations to promote the adoption of best practices in coffee production, including sustainable agriculture, quality control, and post-harvest handling. Provided technical assistance to coffee processors to improve the quality of coffee processing and packaging, Supported the development of a national coffee certification system to ensure compliance with international quality standards.. Results: Successful in achieving its objectives. Over 200,000 coffee farmers were trained on best practices in coffee production, Over 50 coffee processing companies were provided with technical assistance to improve the quality of coffee processing and packaging. Support for the development of a national coffee certification system, enabled Ugandan coffee to meet international quality standards→ Ugandan coffee gained access to new markets, and exports of Ugandan coffee have increased by over 50% in the last five years. Impact: Coffee farmers have reported increased productivity and improved income, leading to improved livelihoods for their families. The project has also contributed to the development of a sustainable coffee sector in Uganda, with improved environmental practices and social development outcomes. Facilitated access to international markets, which has led to increased foreign exchange earnings for the country and contributed to the overall economic development of Uganda. Singapore’s Electronics Industry Singapore's electronics industry has been a key driver of the country's economic growth since the 1970s. The industry has benefited greatly from globalization→enabled Singapore to access new markets and technologies, and attract foreign investment. In the 1970s, the Singapore government recognized the potential of the electronics industry and launched the Electronics Industry Development Plan (EIDP). The plan aimed to develop Singapore's electronics industry by attracting foreign investment and technology, and promoting the growth of local firms. To achieve this, the government implemented various trade and investment policies, such as the Economic Expansion Incentives Act (EEIA), which provided tax incentives and other benefits to foreign investors. The government also invested heavily in infrastructure, education, and research and development to support the growth of the industry. Policies led to Singapore's electronics industry growing rapidly, with many multinational corporations (MNCs) setting up operations in Singapore. The industry became a major exporter, with electronics products accounting for over 40% of Singapore's total exports. Also faced challenges, with the rise of low-cost competitors in other countries, such as China. To remain competitive, Singapore's electronics industry had to adapt and innovate, investing in new technologies and products. Today, Singapore's electronics industry remains a key player in the global electronics market, with companies such as Flex, Micron, and ST Engineering operating in Singapore. The success of Singapore's electronics industry is a testament to the importance of trade and globalization in driving economic growth. By embracing trade and foreign investment, and investing in infrastructure and education, Singapore was able to transform its economy and become a global player in the electronics industry. Ruschlikon, Switzerland and Zambia → It is a village with a very low tax rate and very wealthy residents BUT they also receive more tax revenue than it can use mostly because of one resident, Ivan Glasenberg (CEO of Glencore) Glencore owns copper mines in Zambia that are not generating a large bounty of tax revenue for Zambians (Zambia is the 3rd largest copper reserves in the world but 60% of the population lives on less than $1 a day and 80% are unemployed) In comparison to Ruschlikon where house prices are soaring + unemployment is virtually non-existent and social problems are few and rare → they prioritize discretion and focus on not showing wealth. Zambian citizens are less fortunate→ Zambian Vice President Guy Scott said “We are aware that Africa is losing more money from tax avoidance by foreign companies every year than in aid from countries from which these people come” In addition to the terms of their bail out by the World Bank and IMF in 2000 when copper prices hit rock bottom that the country agreed to loan conditions required to sell off mines, they can't benefit from the subsequent rebound of prices by over 250%. Glencore spotted this opportunity in 2000’s failing mines negotiated a royalty rate of 0.6% with Zambian administration, lowest in Africa→ leaves Zambia out of pocket by exploitation of their own resources In 2010, approximately 80% of African exports were based in oil, minerals and agricultural goods. Around $160 billion worth of taxes are lost from developing countries each year as a result of multinational corporations dodging paying them. ​Liberia declared corruption public enemy No.1 and its revenue rose from US$80 million in 2004/5 to US$142 million in 2006/7. How effective is aid in relation to global poverty? The World Economic Forum says that foreign aid is controversial with three distinct perspectives…

One believes that official assistance is ineffective, and has harmed poor countries throughout the years.

This views official aid as creating dependency, fostering corruption, and encouraging currency overvaluation (Easterly 2014 and Moyo 2010). It also prevents countries from taking advantage of the opportunities provided by the global economy.

Another camp believes that aid levels have been too low, and that large increases would help reduce poverty.

This camp, however, believes we need a rethinking on the way in which aid is provided (Sachs 2009 and Stiglitz 2002). In particular, specific interventions, such as anti-malaria programmes, should be emphasized. ​ The third camp is less vocal, and includes authors such as Collier (2007), who has emphasized the role of a number of ‘traps’ in perpetuating destitution, and Banerjee and Duflo (2011) who argue that the use of ‘randomized control trials’ may help devise effective and specific aid programmes in the war against poverty and underdevelopment.

Impacts of US Foreign Aid ADVANTAGES Health: 3 million lives saved annually by USAID immunization programs United Nations Drinking Water Supply and Sanitation decade (USAID played a major role) resulted in 1.3 billion people receiving safe drinking water + 750 million people receiving sanitation for the first time USAID’s population program= 50 million couples worldwide use family planning In 1987, USAID initiated HIV/AIDS prevention in 32 countries with over 850,000 people reached with HIv prevention education and 40,000 people trained to support HIV/AIDS programs in their own countries Food: 43 of top 50 consumer nations of American agricultural products were once US foreign aid recipients Between 1990-1993 US exports to developing countries increases by $46 billion USAID helped train 21,000 farm families in Honduras to improve land cultivation practices and reduce soil erosion by 70,000 tons Agricultural research sponsored by the US sparked “Green Revolution” in India Sustainability USAID has targeted $15 million in technical assistance for energy sectors of developing countries US assistance has built a $50 billion annual market for private power (out competing Japan and Germany) Economic Growth 80,000 people and $1 billion in US and Filipino assets saved due to early warning equipment installed by USAID that wanted that the Mount Pinatubo volcano was going to erupt in 1991 USAID start-up support for loans and operating costs of Banco Solidario that is now a self-sustaining commercial leader that needs no further aid serving about 44,000 small Bolivian with loans averaging $200 each

DISADVANTAGES USAID has begun to shift more of its funding towards US companies like General Electric and directly to smaller, local organizations

Foreign Aid and Tanzania In early 1990’s Tanzania shifted from one party to multiparty system allowing for greater freedom for the press and civil society. Been a donor darling since the late 1980;s due to the institution of wide-ranging structural adjustment policies (Second largest aid recipient in Sub-Saharan Africa receiving $26.85 billion in assistance from 1990 to 2010)

BUT mismanagement of privatization in Tanzania has had negative impacts on accountability

Apple and Bringing Sustainability → Apple implemented several policies in LEDC’s to promote sustainability Renewable Energy projects: In China, Apple partnered with local companies to build two solar farms with a combined capacity of 40 MW to power its facilities and reduce carbon footprint Supplier responsibility: Conducts regular audits of suppliers to ensure they comply with social and environmental standards to LEDC + provides training to help them improve Recycling program: In India and Brazil, Apple collects old devices from consumers and recycles them in an environmentally friendly way. Sustainable Packaging: In Vietnam and China, Apple uses recycled and renewable materials in packaging and has eliminated harmful chemicals from its production processes Water Conservation: China and India, Apple has installed water efficient fixtures to use recycled water for cooling and landscaping

Interconnectedness of China and USA → Both are two of the largest economies in the world that engage in a significant amount of trade with China being largest goods exporter to USA and US being second-largest exporter to China This benefits both countries… China is able to grow its economy rapidly by exporting goods to the USA USA benefits from lower-cost goods and access to China’s growing consumer market

Iphone and Adam Smith’s Specialization Theory →Apple relies on a complex global supply chain to produce the Iphone. Adam Smith’s theory of specialization→ Idea that countries should specialize in producing goods or services that they can produce most efficiently since it will increase productivity and therefore wealth creation

Iphones are produced in this manner Research and development: Apple designers and engineers develop specifications for Iphone in California Component Manufacturing: Specialized suppliers in Japan, South Korea and Taiwan produce parts like screen, camera, processor etc, Assembly: Components shipped to china and assembled to final product by Foxconn Distribution: Finished Iphones shipped all around the world

Through this process Apple can produce Iphones more efficiently and more cost effectively in comparison to if they did everything in house by relying of specialization of different countries and companies contributing their skills

Competition in Automobile industry Electric vehicles: brought new players into industry in form of Tesla, Rivian and Lucid Motors→ challenge established auto-makers with innovation and sustainability Autonomous Vehicles: Development of self-driving technology by companies like Waymo, Cruise and even Uber investing heavily in self driving cars Ride-Sharing: Emergence of Uber and Lyft disrupts traditional market since consumers rely on these services instead of purchasing cars Led to… greater variety for consumers and even more affordable and sustainable transportation

Nike : More Job Opportunities and Foreign Investment Brand produces shoes in China, Vietnam and Indonesia and their apparel in Sri Lanka, Vietnam and Mexico In Vietnam, where Nike has a large production base→ created jobs in manufacturing, research and development as well as marketing sectors. The International Labour Organization (ILO) states that Nike supports 200,000 jobs in Vietnam alone.

Nike has also invested in initiative to create jobs and economic development in China and Indonesia → plan to train women in entrepreneurship and small business management in Indonesia

China’s Belt and Road Initiative Massive Infrastructure development project that aims to connect Asia, Europe and Africa through road, railway and port networks, founded in 2013 by the Chinese government. Better transport= Better connectivity= Improves access to basic services that supports economic activity, infrastructure investment → reduces poverty, creates jobs and improves quality of life This benefits China because… Expands Chinese markers to boost economic growth and strengthen its position as economic power Geopolitical influence since it builds economic and political ties Strengthen energy security and reduce dependence on foreign suppliers because of better access Improve standard of living for Chinese people due to increased demand for Chinese goods and services, attracting foreign investment

Toyota and Michigan University Technology transfer is the process by which knowledge, skills and technologies are shared between countries and regions that is facilitated by globalization. → Partnership between Toyota and University of Michigan allowed Toyota to access expertise and knowledge from researchers and scientists from the university University of Michigan has benefited from financial and technical resources of Toyota Overall has led to new technology development and business models→ improve Toyotas competitiveness and contribute to economic growth

Cultural Fusion between USA and Japan In post WW2 era, the two countries established a strong economic and cultural relationship Sushi, anime and martial arts are popular in USA→Promotes cross-cultural tolerance Japanese countries invested in USA allowing american companies to expand into Japan while contributing to economic growth and creating jobs

Structural Adjustment programmes and Unequal distribution of benefits SAP’s are policies implemented by IMF and world back in 80’s and 90’s for developing countries experiencing economic crises Requires developing countries to implement economic reforms life reduced government spending, deregulation of markets and opening of economy for foreign investment in exchange for aid

Critics argue that SAP’s favored interests of developed countries and MNCS of those countries SAP’s often required developing countries to privatize state owned enterprises which were later sold to foreign investors resulting in loss of state revenue and control over key industries Opening up to foreign competition put local businesses at a disadvantage = job loss Focus on exports rather than developing own domestic industries that resulted in an over reliance on exporting raw materials and lack of economic diversification SAP’s were applied in Ghana, Nigeria, Uganda, peru, Phillipines Ecuador and more

IBM In India and job displacement IBM began outsourcing back office operations to India that transferred jobs from USA to India→ loss of jobs in USA, gain in India → In 2ut019, IBM laid off thousands of Indian employees (controversy and concern) as a part of a global restructuring plan that aimed to streamline company’s operations and cut costs

Automobile Industry And Pollution Air Pollution:Toyota, Volkswagen and Ford Motor use paint spraying and welding that release pollutants into the air→ negative impacts on public health and environment Water Pollution: Toyota’s operations generate wastewater that contains heavy metals and chemicals that if not properly treated can enter local waterways causing contamination Land Use: MNC factories of Toyota require large amounts of land for their operations that can lead to deforestation and have negative impacts on local ecosystems and biodiversity Resource Use: Toyota’s operations require significant amounts of energy, water and raw materials that if not managed properly can lead to resource depletion. Coca Cola in El Salvador Concerns and Response Water depletion and contamination: uses large amount of water in production process

NAFTA and loss of sovereignty in Mexico

Cultural death and MNCs : McDonalds Microsoft Monopoly Microsoft employs over 175,000 people globally in over 100 countries for things like software development, marketing and customer service

Garment Industry a