...Business September 25, 2012 Agricultural Subsidies and Development Summary of Case Study: Agricultural Subsidies and Development The closing case describes the government sponsored subsidies and tariffs on agricultural products in the United States and EU countries. The subsidies and tariffs protect farmers in those countries from low commodity prices, however at the same time, hurt farmers in the developing nations. According to the United Nation, the subsidies and tariffs effectively cancel out the aid provided by the developed world to the developing nations by limiting export earnings from agricultural products. Discussion of this case can revolve around the following questions: 1) If agricultural tariffs and subsidies to producers were removed overnight, what would the impact be on the average consumer in developed nations such as the US and the EU countries? What would the impact be on the average farmer? Do you think the total benefits outweigh the total cost or vice versa? I believe if agricultural tariffs and subsidies were removed overnight the impact on the average consumer in a developed nation would be, the prices of goods would rise because developed nations would no longer be dumping the surplus of good on the world market. The impact on the average farmer would be that they are no longer protected from international demand and prices. I do not think the total benefits outweigh the cost; they should remove all tariffs and subsidies and make it possible for...
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...Business September 25, 2012 Agricultural Subsidies and Development Summary of Case Study: Agricultural Subsidies and Development The closing case describes the government sponsored subsidies and tariffs on agricultural products in the United States and EU countries. The subsidies and tariffs protect farmers in those countries from low commodity prices, however at the same time, hurt farmers in the developing nations. According to the United Nation, the subsidies and tariffs effectively cancel out the aid provided by the developed world to the developing nations by limiting export earnings from agricultural products. Discussion of this case can revolve around the following questions: 1) If agricultural tariffs and subsidies to producers were removed overnight, what would the impact be on the average consumer in developed nations such as the US and the EU countries? What would the impact be on the average farmer? Do you think the total benefits outweigh the total cost or vice versa? I believe if agricultural tariffs and subsidies were removed overnight the impact on the average consumer in a developed nation would be, the prices of goods would rise because developed nations would no longer be dumping the surplus of good on the world market. The impact on the average farmer would be that they are no longer protected from international demand and prices. I do not think the total benefits outweigh the cost; they should remove all tariffs and subsidies and make it possible for...
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...International Economics BEQM607 "Agricultural Subsidies & Development" Completed by: John Williams - Rosita Tran - Shrey Sharma- 11739401 Word Count: Viraj Bhatti - Introduction Agriculture accounts for 9% of world trade as is therefore not surprisingly top of the list for government policy for many countries, with agriculture industry still being the largest employer in many developing and third world countries. Currently there are many global issues regarding agricultural policies which include subsidies and tariffs, with continues debate whether they are economically beneficial or in fact detrimental to the agriculture trade market. The world is in a current face off involving developed countries such USA and EU and rising developing countries such as Brazil and India. International efforts have been made to solve issues through trade negotiations such as The Doha Round, a current round of trade negotiations among the World Trade Organization members, which have been going on since 2001 due to the complexity of the issues surrounding agricultural industry. The aim of this essay to critically analyse the effects of removing tariffs and subsidies on the average consumer and average farmer in developed countries as well as how it will effect developing countries. Removing Tariffs and Subsidies “The current subsidies distort incentives for the global trade of agricultural commodities in which other countries may have a comparative advantage. Allowing...
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...are considered to be the first of nine negotiating rounds to address the “needs and the interests” of developing countries (Elliott, 2007, p. 1). There have been many attempts to reach an agreement between countries on agricultural liberalization. The failure to reacha solution still persists, however, as was seen at the “Battle in Seattle”, in November of 1999 where strong anti-WTO sentiment took to the streets in mass protests. (Fabiosa, 2008, p. 1). This anti-trade stance asks the fundamental question whether agricultural trade liberalization is beneficial to developing countries or not. The growth of globalization creates interdependence among countries and increases the capacity of the economy of the countries to engage in international trade. Trade liberalization in agriculture has significant benefits to individuals who devote their lives to agriculture, mainly small farmers from developing countries. This idea would also promote economic growth in these countries. In order to make trade liberalization in agriculture an ideal concept, there are still a few hurdles that need to be cleared, such as granting developing nations funds to meet environmental goals, abolishment of export subsidies, and lost tariff replacement. In order to allow participants to increase trade globally and benefit from it, WTO’s goal is to lower trade barriers as much as possible among its members and to develop fairer trade policies for...
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...to what would help the citizens of the poorest nations more the first being to increase foreign aid and the second, to remove all agricultural tariffs and subsidies. The main problem surrounding subsidies is it allows first world exporters to drastically reduce the prices of their goods and, thus have a commercial advantage over the farmers of poorer nations. The question remains would it in fact benefit the developing world greater to remove subsidies and tariffs on agricultural products or, simply increase foreign aid to these poorer nations? It is an important issue as it concerns many factors including fundamental morals, world economics, the welfare of the developing world and welfare of the developed world. This essay will help to establish the fact that although the past increases and, possible future increases of foreign aid received by developing countries is not unwelcomed, the fact the foreign aid continues to be necessary shows that it is not a permanent solution for the economy of poorer nations. The problems still remain that aid will continue to have negligible impact if subsidies and tariffs are not significantly restricted. There is an underling dilemma between the ethics and practices of international trade and business. The point put simply is rich countries can maintain their own standards with tariffs and agricultural subsidies and, ease their conscience with foreign aid. The issue with this form of reasoning is it doesn't solve the real problem in the long...
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...AGRICULTURE SUBSIDIES AND DEVELOPMENT QUESTION 1 IF AGRICULTURAL TARIFFS AND SUBSIDIES TO PRODUCERS WERE REMOVED OVERNIGHT, WHAT WOULD THE IMPACT BE IN THE AVERAGE CONSUMER IN DEVELOPED NATIONS SUCH AS THE UNITED STATES AND THE EU COUNTRIES? WHAT WOULD BE THE IMPACT ON THE AVERAGE FARMER? Lowering the tariffs and getting rid of subsidies would allow the average consumers to save. The prices for these products would be cheaper and the taxes paid would eliminate because there would no longer be any subsidies to pay for. On the other had this would be a negative for the average farmers in these nations. There would no longer be a surplus of goods that could be sold to monopolize the market. Farmers would no longer benefit from the subsidies they received all profits would be based on production. Lower commodity prices in developing nations would cause farmers to lose revenue because in order to make a profit they would have to raise prices causing them to not be competitive within their market. QUESTION 2 WHICH DO YOU THINK WOULD HELP THE CITIZENS OF THE WORLD’S POOREST NATIONS MORE, INCREASING FOREIGN AID OR REMOVING ALL AGRICULTURAL TARIFFS AND SUBSIDES? Foreign aid comes with strings attached and it does not come without a cost. Foreign aid only seems to balance out the “goodwill” of developed countries. As stated in the case the foreign aid that these developing nations receive from developed countries is less than what they are losing if allowed to sell the commodities...
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...Political Motives Protect Jobs Preserve National Security National Security and Imports National Security and Exports Respond To “Unfair” Trade Gain Influence Economic Motives Protect Infant Industries Pursue Strategic Trade Policy Benefits of Strategic Trade Policy Drawbacks of Strategic Trade Policy Cultural Motives Cultural Influence of the United States Methods of Promoting Trade Subsidies Subsidies in Media and Entertainment Drawbacks of Subsidies Export Financing Foreign Trade Zones Special Government Agencies Methods of Restricting Trade Tariffs Protect Domestic Producers Generate Revenue Quotas Reason for Import Quotas Reasons for Export Quotas Voluntary Export Restraints Tariff-Quotas Embargoes Local Content Requirements Administrative Delays Currency Controls Global Trading System 1 General Agreement on Tariffs and Trade (GATT) Uruguay Round of Negotiations Agreement on Services Agreement on Intellectual Property Agreement on Agricultural Subsidies World Trade Organization (WTO) Dispute Settlement in the WTO Dumping and the WTO Subsidies and the WTO Doha Round of Negotiations The WTO and the Environment Bottom Line for Business Implications of Trade Protection Implications of the Global Trading System A comprehensive set of specially designed PowerPoint slides (designated ‘PPT’ below) is available for use with...
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...Protect Jobs Preserve National Security National Security and Imports National Security and Exports Respond To “Unfair” Trade Gain Influence Economic Motives Protect Infant Industries Pursue Strategic Trade Policy Benefits of Strategic Trade Policy Drawbacks of Strategic Trade Policy Cultural Motives Cultural Influence of the United States Methods of Promoting Trade Subsidies Subsidies in Media and Entertainment Drawbacks of Subsidies Export Financing Foreign Trade Zones Special Government Agencies Methods of Restricting Trade Tariffs Protect Domestic Producers Generate Revenue Quotas Reason for Import Quotas Reasons for Export Quotas Voluntary Export Restraints Tariff-Quotas Embargoes Local Content Requirements Administrative Delays Currency Controls Global Trading System General Agreement on Tariffs and Trade (GATT) Uruguay Round of Negotiations Agreement on Services Agreement on Intellectual Property Agreement on Agricultural Subsidies World Trade Organization (WTO) Dispute Settlement in the WTO Dumping and the WTO Subsidies and the WTO Doha Round of Negotiations The WTO and the Environment Bottom Line for Business Implications of Trade Protection Implications of the Global Trading System A comprehensive set of specially designed...
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...WTO AND INDIAN ECONOMY (AGRICULTURAL IMPLICATIONS) BY: RAYNAH FERNANDES 13 SRUSHTI GANGAN 14 NEHA GAONKAR 15 INDEX 1. WORLD TRADE ORGANISATION GATT Principles of WTO Objectives & Function 2. INDIA & WTO 3. INDIAN ECONOMY 4. INDIAN AGRICULTURE Agricultural Trade Agricultural Support Policies Importance Of Indian Agriculture 5. AGREEMENT ON AGRICULTURE The Three Boxes: Green, Amber and Blue Trend In Pattern Of Consumption Implication Of Agreement : Short Term and Long Term 6. WTO & INDIAN AGRICULTURE India’s Commitment India’s Agricultural Trade Under WTO Regime 7. A STUDY & ITS FINDINGS 8. SUGGESTIONS 9. BIBLIOGRPHY ACKNOWLEGEMENT We would like to acknowledge and express our sincerest gratitude for the efforts and timely guidance of our professor Mrs. Neelam Shetty of Managerial Economics for providing us the opportunity to study the impact of WTO agreements on the Indian economy especially focused on the agricultural sector. We would also like to thanks and express our gratitude towards professor Mr. Agnelo Menezes of economics from the Bachelors of Arts faculty and his student from XRCVC Master Prashant Lindayat. Each and every team member gave in his best to make sure that this report has all the necessary inputs and is completed on time. We definitely had a knowledgeful and enriching experience. WORLD TRADE...
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...Cases in the Global Business Environment The World Trade Organisation (WTO) It has been suggested that “of all major economic institutions, the WTO has the worst reputation”. Outline the role of the WTO, and explain why it has proved difficult to reach agreement in recent WTO meetings in Doha, Geneva and Hong Kong. The World Trade Organisation (WTO) The WTO was founded in 1995 after the 8 year Uruguay round of talks, and it succeeded the General Agreement on Tariffs and Trade (GATT) created in 1947. Most of the WTO's current work comes from the Uruguay Round of negotiations (1986-1994). Headquartered in Geneva, Switzerland, the WTO has 151 members (as at 27th July 2007), accounting for over 97% of world trade. The organisation is governed by a Ministerial Conference, which meets every two years, a General Council which implements the conference's policy decisions and a director-general appointed by the Ministerial Conference. The World Trade Organization deals with the rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business. These agreements are the legal ground-rules for international commerce Global trade deals are negotiated at the Ministerial Conference meetings, which are known as trade rounds and are aimed at reducing barriers for trade. One of the...
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...AGRICULTURE SUBSIDIES AND DEVELOPMENT QUESTION 1 IF AGRICULTURAL TARIFFS AND SUBSIDIES TO PRODUCERS WERE REMOVED OVERNIGHT, WHAT WOULD THE IMPACT BE IN THE AVERAGE CONSUMER IN DEVELOPED NATIONS SUCH AS THE UNITED STATES AND THE EU COUNTRIES? WHAT WOULD BE THE IMPACT ON THE AVERAGE FARMER? Lowering the tariffs and getting rid of subsidies would allow the average consumers to save. The prices for these products would be cheaper and the taxes paid would eliminate because there would no longer be any subsidies to pay for. On the other had this would be a negative for the average farmers in these nations. There would no longer be a surplus of goods that could be sold to monopolize the market. Farmers would no longer benefit from the subsidies they received all profits would be based on production. Lower commodity prices in developing nations would cause farmers to lose revenue because in order to make a profit they would have to raise prices causing them to not be competitive within their market. QUESTION 2 WHICH DO YOU THINK WOULD HELP THE CITIZENS OF THE WORLD’S POOREST NATIONS MORE, INCREASING FOREIGN AID OR REMOVING ALL AGRICULTURAL TARIFFS AND SUBSIDES? Foreign aid comes with strings attached and it does not come without a cost. Foreign aid only seems to balance out the “goodwill” of developed countries. As stated in the case the foreign aid that these developing nations receive from developed countries is less than what they are losing if allowed to sell the commodities...
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...world’s poorest nations more, increasing foreign aid or removing all agricultural tariffs and subsidies? It is our view that there is not one simple answer to this complex issue. Certainly, if the richest countries in the world removed all tariffs and subsidies it would provide an immediate benefit to the world’s poorest nations, but this would also have a huge negative impact on farmers in world’s wealthy nations, which makes it an impractical solution. On the other hand, simply increasing foreign aid comes with its own set of challenges, such as creating an overdependence on wealthy nations and encouraging poor nations to be less self-sufficient. The solution to this problem must be achieved by striking a balance between the amount of foreign aid given to poor nations and the tariffs and subsidies that are given to support the farmers of wealthy nations. For example, the subsidies being provided to US cotton farmers are believed to be depressing the world cotton prices by as much as 50 percent. We believe that a well planned, gradual move towards a subsidy level that reduces the depressed cotton prices by only 20 percent (versus the current 50 percent) would help to achieve a better balance, providing countries such as Brazil an opportunity to compete for its share of the world’s cotton market. If the wealthiest countries in the world would work together to strike a balance in each of the major agricultural areas, it would allow the world’s poorest nations the opportunity to...
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...World Trade Organization: The art of a little give and take Historical Overview of the WTO The World Trade Organization (WTO) was founded in 1995 as the predecessor to the General Agreements on Tariffs and Trade (GATT). The GATT was developed in 1947 on a provisional base after World War 2; it was not started as an international organization, but rather an inter-governmental treaty. Instead of being made up of participating members, such as the WTO, the GATT consisted of contracting parties. As stated in the preamble of the GATT-1947, the objectives of the contracting parties include ‘raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand ,developing the full use of the resources of the world and expanding the production and exchange of goods’(GATT, 1994a: 486). It continues by stating that reciprocal and mutually advantageous arrangements involving a substantial reduction of tariffs and other barriers to trade as well as the elimination of discriminatory treatment in international trade will contribute to the realization of these objectives. So in short the role of the GATT, was (and still is) to facilitate the reduction of barriers of trade and ensure greater equality with respect to conditions of market access for contracting parties. Through the negotiations made by the original 23 countries of the GATT, with additions of over 50 countries, came the charter for the International Trade Organization...
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...issues. • Explain the implications for managers of developments in the world trading system. This chapter focuses on the political systems and tools of trade policy. The major objective of this chapter is to describe how political realities shape the international trading system. With an introduction to tariffs, subsidies, and the development of the world trading system, the chapter describes the evolution of the World Trade Organization and its impact on the global business environment. While in theory many countries adhere to the free trade ideal outlined in Chapter 5, in practice most have been reluctant to engage in unrestricted free trade. The US continues to restrict trade in technological and militarily sensitive products as well as in textiles, sugar, and other basic products in response to domestic political pressures. OUTLINE OF CHAPTER 6: THE POLITICAL ECONOMY OF INTERNATIONAL TRADE Opening Case: United States Cotton Subsidies and World Trade Introduction Instruments of Trade Policy Tariffs Subsidies Import Quotas and Voluntary Export Restraints Local Content Requirements Administrative Policies Antidumping Policies Country Focus: Subsidized Wheat Production in Japan Management Focus: U.S. Magnesium Seeks Protection The Case for Government Intervention Political Arguments for Intervention Economic Arguments...
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...Corbeau Georgios Gavotsis Jie Yue Michael Mahmoud Nanditha Chinnaraj Raphael Zumofen Business Economics Lecturer: Professor David Shepherd Imperial College Business School MSc Management Word Count: 2495 10th November 2011 “The common theme for why all these commodity prices are higher is the substantial increase in fund flow into these markets, which are not big enough to withstand the increase in funds without pushing up prices” By Kevin Morrison, Journalist for the Financial Times April 9, 2006 Table of Contents i. Introduction 1 ii. Movements in food prices 1 iii. Structure of the food market 8 iv. Government Intervention in the Food Market 10 a. Tariffs and Quotas 10 b. Subsidies and Export Taxes 11 c. Price Support Mechanisms 13 v. Forecast of food prices evolution over the next 20 years 16 vi. Bibliography 21 Introduction The aim of this paper is to analyse the various factors that have contributed not only to rise of food prices over the last two decades, ending the trend of falling food prices#, but also how the structure of the food commodity market and government intervention have contributed to price spikes and generally increasing food commodity prices. The paper will conclude with a forecast of long-term food prices and the factors that will contribute to a continued increase or fall in food commodity prices. Movements in food prices The global food market is described as...
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