POL 4410: Week Five

1
POL 4410 Week Five

• Trade Treaties

2
Structure

• Theories of Trade Treaties
• History of Global Trade Treaties
• Regional Trade Treaties

3
Trade Theories

• Neoclassical Economic Theory
• Interest Group Theory
• Realist / Mercantilist Theory

4
Neoclassical Theory

• Comparative Advantage vs. Absolute Advantage

5
Interest Groups

• Losers from trade may try to block free trade and
  to impose tariffs.
• Protection for sale
• Treaties as commitment devices

6
Realism / Mercantilism

• States sign treaties for two reasons(1) To
  bully other weaker states(2) Because treaties
  dont matter

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Types of Trade Policy

• Unliateral Policy
• Bilateral Deals
• Multilateral Institutions

8
Trade Treaties pre-WWII

• Cobden Chevalier in 1860
• MFN
• Reciprocal Trade Agreements Act in 1934

9
GATT

• Founded in 1948 with 23 members
• Based on reciprocity and MFN - many exceptions
  made
• Series of rounds

10
WTO

• Founded in 1995 with 76 members, now 149.
• Has Dispute Settlement Body
• Consensus and negotiations
• EU / US trade disputes

11
European Union

• European Coal and Steel Community in 1951
• European Economic Community in 1957
• European Union in 1992
• Tripartite structure Commission, Council of
  Ministers, European Parliament

12
NAFTA and CAFTA

• 1994 NAFTA founded
• Chapter 11 and Chapter 19
• CAFTA signed 2005

13
Other regional treaties

• Asia Pacific economic Cooperation group
• Mercosur
• Andean Pact
• Australia-New Zealand

14
Lomborg Anderson

• Static Gains inter / intra industry
• Dynamic Gains knowledge faster growth from
  imported capital goods
• Why protectionism?
• What reduces protectionism? Info tech foreign
  openness trade agreements
• Costs social and environmental?

15
Anderson (2)

• 1) Free trade (2) Doha and APEC (MFN) (3)
  FTAs (non-MFN) (4) PTAs with ex-colonies.
• Binding? MFN? Reciprocal?
• Free trade 2(Doha) 24 (FTAA)
• Trade diversion vs. trade augmentation
• Bananas and trade diversion 1 / -1 / -13

16
Anderson (3)

• Gross effects versus net effects
• Economic costs of reducing tariffs and subsidies.
• Private and social costs. Concentrated costs and
  diffuse benefits
• Poverty, environment, climate change, conflict

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Pronk

• Positive effects of trade on other areas
  (poverty, health, environment) depend on
  sustainability conditions.
• Trade policy and domestic policy interact
• Gradualism vs. shock therapy. Sticky costs.
• Is WTO actually slowing free trade? Two-track
  liberalization.

18
Bergstein

• Bicycle must keep moving
• Big is beautiful
• Bulding blocks, not stumbling blocs
• Money is central
• Leadership is essential

19
Ruggie

• What is embedded liberalism?
• Power and purpose
• Move from classical liberalism to neoliberalism

20
Wallace

• What is Europeanization? Magnetic / Heineken
  analogies.
• Importance of history and goeography
• Neofunctionalism
• Multi-level governance
• Territorial, Functional, Affiliational
  Integration
• Multiple modes of interaction
• Impact on domestic politics