...Impact of WTO on Globalization Trade Policy Introduction World Trade Organization (WTO), found in 1995 and headquarters is in Geneva, has its clearly main purposes since its beginning that to promote economic and trade development all over the world. Up to the end of 2008, there are more than 135 members in the organization. In particularly, with the expansion of globalization trade, international business is more often than any time in the history. As one of the most crucial carrier of economic globalization, WTO establishes a set of international trade rules focusing on the liberalization, which play a strong role of encouraging and guiding in the process of economic globalization (Pauwelyn, 2005). This essay will mainly discuss WTO’s influence on the rules of globalization trade in combination with the current reform of trade policy. It will explain the topic from the following four aspects in detail: first, the basic rules WTO set up for the international trade, then, rules on e-commerce, the new rising global business, third, the preferential rules made by WTO for developing countries, and at last, it will discuss the impacts of WTO’s regulations on environmental issues when doing global trade. Basic Rules WTO set up for the Global Trade WTO's main objective is to provide adequate competitive opportunities for the trade among the members, which needs recognized common rules and principles for members to abide. There are two basic principles, namely the MFN principle (referred...
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...WHAT IS GLOBAL/INTERNATIONAL TRADE? Global trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), it’s economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries...
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...Barriers to International Trade- Non-Tariff Barriers and Infrastructure on freight transportation Intro Average applied tariffs on industrial products have declined from 15.5 per cent in 1990 to 7.9 per cent in 2003.[1] Yet, the volume of international trade is still less than one would expect from observed differences in factor endowments, tastes and technology between countries (Trefler, 1995). A possible explanation of the missing trade is non-tariff barriers to trade, including transport costs and other costs related to searching for international suppliers or customers, entering into contracts and shipping the goods or services from the domestic producer to the foreign customer. These transaction costs have several dimensions. First, there are the direct monetary outlays on communication, business travel, freight, insurance and legal advice. These are partly determined by the physical and cultural distance between the trading partners, but also the quality of infrastructure and the cost and quality of related services. EXAMPLE A second dimension of transaction costs is time. The proverbial "time is money" suggests a linkage between monetary outlays and the time dimension, but time also plays a role in its own right. This is particularly the case in industries that have adopted just-in-time business practices and have an international supply network. Just-in-time business practices imply that producers have small inventories of intermediate goods and the...
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...converted into another” (Hill, 2009, p. 324). This assignment will define the tariff and non-tariff barriers, the impact in the operations of the global financing and the managing risks. Tariff and non-tariff barriers Tariff is a “tax levied on import (or exports)” (Hill, 2009, p. 6). There are different types of tariff. There are specific tariffs where the price never changes, is always the same. The revenue tariff who raise the money for the government The prohibitive tariff is the one that the price is so high that nobody imports or export with that type of tariff. The protective tariff price of the imports goods and keep their domestic industries save from the competition. The environmental tariff is like the protective tariff but is relate to the environmental. The last one is the retaliatory tariff, already have charges against the country. The non-tariff barriers (NTBs) is the one that will have restrictions for any imports. Some examples are packaging and labeling conditions, products standards, quotas (specific) for the product, licenses for import goods, and sanitation conditions. There are three categories of non-tariff barriers. The first category is the restrictions for imports goods that include the licenses and the import quotas, the import prices (minimum) and deposit, etc. The second category is the methods that there are not directly related with any foreign trade. For example sanitary, technical norms, procedures, bottling, etc. The third...
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...The Impact of Tariff and Non-Tariff Barriers International Trade Introduction In nowadays, tariff and non-tariff barriers have affected the trends and structure of international trade, the geographic direction, and importing and exporting countries relations (Stigler, 1971). This research paper mainly will talk about the tariff, non-tariff, and the relationship and impact of them. Tariff A tariff is simply a tax or duty placed on an imported good by a domestic government. Tariffs are usually levied as a percentage of the declared value of the good, similar to a sales tax. Unlike a sales tax, tariff rates are often different for every good and tariffs do not apply to domestically produced goods. Tariff could be an old and popular method of obtaining revenue from international business and economic activities. Generally, government levy tariffs for three main reasons. The first is that the tariff can protect fledgling domestic industries from foreign competition; the second is that the tariff can protect aging and inefficient domestic industries from foreign competition; the last reason is that the tariff can protect domestic producers from dumping by foreign companies or governments. Dumping occurs when a foreign company charges a price in the domestic market which is "too low". In most instances "too low" is generally understood to be a price which is lower in a foreign market than the price in the domestic market. In other instances "too low" means a price which is below...
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...International Trade Theory and Policy Institution Date The aim of this article is to discuss a number of issues associated with the international trade theory and policy. First, the motives, nature and purpose of the original General Agreement on Tariffs and Trade have been discussed in this article. Also, the extent to which this purpose was achieved in the first 6 rounds of negotiations has been discussed. The reasons that drove President Reagan and his administration to propose the eighth round of negotiations are also featured in this article. Lastly, the reasons why there is still a significantly steep “effective” tariff hampering global free trade, despite fairly low tariffs on final goods have also been discussed in this article. The General Agreement on Tariffs and Trade (GATT) was formed in1947. This was after the United Nation conference whose aim was to create the International Trade Organization failed. The GATT came to an end in 1993. In 1995, the (World trade organization WHO) replaced GATT. GATT principal purpose was to boost fair trade by reducing and taking control of the trade tariffs amongst its member countries. In addition, it was responsible solving any trade disputes between the member countries. Before it ended, The GATT had become interested in the intellectual property rights and the effects of global trade on the environment. The General Agreement on Tariffs and Trade had a provision known “as the most favored nation status.” GATT refers...
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...Name Institution Tutor Date A non-tariff barrier is a barrier restricting trades that relates to imports. The use of non-tariff barriers is on the rise today, and it overshadows the use of tariff barriers to trade. They help in the protection of the health, safety, sanitation and depletion of natural resources that may affect the wellbeing of the citizens. Though some non-tariff barriers do not directly relate to the regulations of foreign trade, they have a significant effect on the economic activities in the foreign trades. There are various non-tariff barriers United Arab Emirates government imposes, and they have both positive and negative impacts on trade in the region. Non-tariff barriers are characterized by reduced quantities of imports: the imposition of the barriers directly affects imports then it means that there will be an automatic reduction on them. There is also an increase in price of the imports, and this characteristics common because if there is a decrease in quantities then it is automatic that the traders will raise prices of the imported products. Changes in the elasticity’s of demand is also a common characteristic in the non-trade barriers, the barriers affect the slopes of the demand curves since quotas reduce the elasticity. There are also variances in the non-trade barriers, and their effects change as time changes, and they rely on the market conditions at a given time. Uncertainty of the non-trade barriers, it causes uncertainty in the implementation...
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...* Tariff and Non-Tariff Barriers * Tariff and Non-Tariff Barriers * Until the mid-21st century most nations could put restrictions on imports from other * countries thus eliminating competition of certain goods within the importing nation. This is * called a tariff. The World Trade Organization (WTO) declared that tariffs represented a * violation of the WTO treaty and were to no longer be used by members of the WTO, but this * created non-tariff barriers. The following will describe tariffs and non-tariff barriers to trade, * why would a country impose any form of tariff, and examples of each. Both tariffs and non-tariff * barriers to trade have an effect global financing operations and managing risk. * Tariffs According to Hill (2009), “a tariff is a tax levied on imports.” A tariff is Japan placing a tax on steel; for every pound of steel imported into Japan the nation exporting the steel would have to pay this tax. The problem with tariffs is it restricts free trade. Because of this restriction of trade lead to the creation of General Agreement on Tariffs and Trade and its successor, the WTO. WTO promotes free trade by limiting the ability of national governments to adopt policies that restrict imports into their nations. Some nations believed a tariff was in the best interest of his or her nation. * A tariff does some positive things for a nation imposing the tariff. A tariff would eliminate competition of a certain...
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...The economic impact of EU membership on the UK This note examines the various channels through which membership of the EU affects the UK economy. A general sense of the EU’s economic impact can be gained by reading Section 1 alone. Subsequent sections deal with particular issues, such as the EU’s effect on UK trade relations, in more detail, and compare the UK’s situation with alternative arrangements. Contents 1 Introduction and summary 2 2 Cost-benefit analyses of EU membership 5 3 The effect of the EU on UK trade relations 6 4 Impact of immigration from the EU 16 5 The impact of EU regulation 20 6 Fiscal consequences of EU membership – the EU budget 23 7 The EU’s effect on consumer prices 28 8 Foreign direct investment (FDI) 30 Appendix table: a comparison of the EU with alternative trading arrangements 32 Boxes Would independence over trade policy lead to better results? 15 The EU budget – winners and losers 27 Trade barriers and economic efficiency 29 Related Library briefings Leaving the EU, Research Paper RP13/42 In brief: UK-EU economic relations, Standard Note SN6091 Norway’s relationship with the EU, Standard Note SN6522 Switzerland’s relationship with the EU, Standard Note SN6090 The UK and Europe: time for a new relationship?, Standard Note SN6393 1 Introduction and summary 1.1 Understanding the economic impact of EU membership EU membership...
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...Trade Name Institution Barriers to trade are government-induced restrictions on trade. There are several different types of trade barrier. They include tariffs and non-tariff barriers. A tariff is the amount of import duty charged on a particular type of goods. Non-tariff trade barriers are measures intended to favor local industry (Maskus, 2001). They can include trade regulations, labeling rules, and unfair government subsidies The World Trade Organization (WTO) deals with the global rules of trade amongst nations and its main purpose is ensuring that trade flows as smoothly, predictably and freely as possible. A major rule of the multilateral trade system states that reductions in trade barriers are applied, on a most-favored-nation basis, to all World Trade Organization members (Hoekman, 2009). This means that no WTO member is discriminated against by a fellow member's trade regime. Regional trade agreements (RTAs) are however an exception to this rule. Under RTAs reductions in trade barriers apply only to the parties to the agreement. There are two major types of regional trade agreements under the World Trade Organization; customs unions and free trade areas. Some countries may decide to sign interim agreements operating during a transition period, ultimately leading to the creation of a customs union or a free-trade area. Regional trade agreements must be consistent with the World Trade Organization rules that govern such agreements, which require...
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...Faculty of Management Studies (MSU) Assignment on NAFTA (Subject : International Marketing) 1 Assignment on NAFTA Sub: International Marketing Submitted by: Submitted to: Rajesh Madnani Roll No. 9 5th Semester MBA – Evening (XVIIIth Batch) Mr. Seshan Iyer FACULTY OF MANAGEMENT STUDIES THE M.S.UNIVERSITY OF BARODA Submitted by Rajesh Madnani (Roll No.9) Submitted to Mr. Seshan Iyer Faculty of Management Studies (MSU) Assignment on NAFTA (Subject : International Marketing) 2 What is NAFTA North American Free Trade Agreement (NAFTA) is an agreement made between the governments of Mexico, Canada and the United States for the purpose of eliminating trade barriers among them. Important Documents: - North American Free Trade Agreement (with preamble, 22 chapters, 7 annexes, and articles) -procedural forms NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC). Following diplomatic negotiations dating back to 1990 among the three nations, U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed the agreement in their respective capitals on December 17, 1992.[5] The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch. The agreement was then given to each country’s legislative in order to make changes...
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...losses * Interdependent economy to lessen the impact of economic loss on food, fuel and property prices * To protect job losses at national producers and possible bankruptcy * Developing countries were concerned about safety rules and environmental concerns. * In an emerging economy, a barrier to trade and blocking of imported goods due to safety and environmental reasons could spark entrepreneurs to grow the local economy with local jobs and local suppliers Protectionism = “Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts to local businesses and direct state intervention.” (http://www.investopedia.com/terms/p/protectionism.asp) QUESTION 2: Despite the sharp economic contraction during 2008-2009, the increase in protectionist measures was fairly modest. Why do you think this was the case? * After the 1930 economic slump, some of the trade constraints did more harm than good. * The WTO instituted protectionist measures to protect countries and provide a more stable process during an economic down turn * Business was more aware * Treaties were put in place from 1930 between countries and this limit governments to raise trade barriers * Measures were also in the form of non-tariffs barriers * “The world economy is interdependent due...
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...Tariff Barriers. Tariffs or import duties are tax imposed on imported goods primarily for the purpose of raising their selling price in the importing nation’s market to reduce competition for domestic producers or stimulate local production. A few smaller nations apply them to raise revenue on both imports and exports. Imposing of tariffs can result in retaliation that is harmful rather than helpful for a country and its well-being: In 1920, American farmers lobbied congress for tariff protection on its agricultural products. Overtime more domestic producers joined with agricultural interests, seeking their own protection from foreign competitors. The resulting legislative proposal increased tariffs for more than 20,000 items across a broad range of industries. In 1929, the Smoot-Hawley Tariff Act established some of the highest levels of tariffs ever imposed by US. That day stock market crashed, falling 12%. Despite protest from 34 foreign countries, the act was signed in 1930. The result was a retaliatory trade war, characterized by tit-for-tat tariffs and protectionism between trading nations. World trade fell from $5.7 billion to $1.9 billion, industrial efficiency and the effects of comparative advantage were sharply reduced, unemployment increased dramatically and the world was pushed into decade-long economic depression. Ad Valorem, Specific and Compound Duties. Import duties are three types; 1) Ad Valorem, 2) Specific, or 3) a combination of two called compound...
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...Chapter 7 Government Intervention in International Business GOVERNMENT INTERVENTION 1. In a short essay, describe two methods of government intervention. What is the purpose of government intervention in international business? Answer Government intervention is often manifested as protectionism. Protectionism refers to national economic policies designed to restrict free trade and protect domestic industries from foreign competition. Protectionism often leads to two types of intervention: tariffs and nontariff barriers. A tariff is a tax imposed by government on imported products, effectively increasing cost of acquisition for the customer. A nontariff trade barrier, such as a quota, is a government policy, regulation, or procedure that impedes trade through means other than explicit tariffs. Governments intervene in trade and investment to achieve political, social, or economic objectives. Barriers are often applied to benefit specific interest groups, such as domestic firms, industries, and labor unions. A key rationale is to create jobs by protecting industries from foreign competition. Governments may also intervene to support home-grown industries or firms. In various ways, government intervention alters the competitive positions of companies and industries, and the status of citizens. (pp. 195-196; concept; Learning Objective 1; moderate; AACSB: Analytic Skills) RATIONALE FOR GOVERNMENT INTERVENTION 2. In a short essay, explain the four main motives for...
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...Regional Economic Integration and the Impact of the Single European Market Regional Economic Integration is an agreement between countries to reduce or remove trade barriers so that counties within the agreement will benefit by joining the integration. Without this Regional Economic Integration it was difficult for countries to trade because exporting goods from one country to another always had tariffs and nontariff barriers, making it harder for countries to ultimately benefit from trade between one another. This can be done by forming a Free Trade Area, Custom Union, Common Market, Economic Union, or Political union. A Free Trade Area is where counties in the group try and remove tariffs and quotas on the goods and services being traded between the countries. By choosing Free Trade Areas they are allowed to trade freely among member but have an independent policy for non-members. The European Free Trade Association is an example of a free trade area. A Custom Union is similar to free trade areas but members must conduct and pursue common external tariff. Custom unions help increase efficiency by bring the countries involved closer. The European Union is an example of a custom union. A common market is basically custom unions that along with increase efficiency, allow for free factor mobility across members. It makes it easy for capital and labor to be traded between members of the common market. An economic union is a union just like a common market but wants...
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