International Trade

International Trade

1. Comparitive advantage = you and produce most of what you are really good at + a friend produces things their really good at = you both don't have to do what you are bad at

   • Then you swap both of your really good products = international trade
     • This has been hamprerd in past by people wanting to protect ecerything (protectionism) + transport

2. Barriers to trade + Protectionism

   • tariff = tax on importing stuff
   • Import Licence = regulation controlling where something can come from
   • Import Quota = physical limit to what can be imported
   • Subisdy = opposite of tariff = financial reward for using own products or exporting products
   • Voluntary export restraint = self imposed tariff
   • Voluntary Export restraint = self imposed embargo
   • Other = labour laws + quality standards

3. Trends in Volume and Pattern

   • 1970-2000's Protectionism died + free market became cool = WTO + RTAs (regional trade agreements) = reduced trade barriers - slowed a little after 2008
   • World trade still dominated by 3 Economic blocs North America + Europe + East Asia (Japan + SK + Taiwan) - 25% of World Trade = Japan + USA + Germany: + other G7 (UK + Canada + Italy + France) = 50% This is changing go China
     • In 2013 $18.8 trillion = world trade in goods + $6 trillion in services - by 2020 it will be $35 trllion and $6 trllion in services + intra-regional trade EU 7 trillion + Asia $5 trillion + Asia-Pacific will grow strongest whilst Sub-Saharan Africa will struggle with its most important market in Europe - biggest change in machinery + transport
     • Trends in Investment - FDI (foreign direct investnent) of money or resources into a country - this is needed to kickstart growth - divided unequally - Countries with most Investment = USA $258 billion + China $220 billion + Belguim $102 billion
       • Reasons for a country having a lot of FDI relative to national income = 2 natural resources (Mongolia + DRC) + Financial services ( Luzemburg + HK) - The most important is size of population = size of market
   • Fair Trade + Ethical Investment
     • Fair trade = social movement which aims to create more equal conditions for poor countries in International Trade- mainly in agriculture - cotton + coffee + chocolate which are moved from unindustrialised to industrialised - leading to exploitation: Instead pay more for more equal prices + encourage cdo-operatives (kinda like Trade Unions
       • Alternative trade Groups Oxham + Cafe Direct
       • This is different to Free Trade which = increase growth + benefits nations + TNCs + expolitive +tariff lowering + IMF World Bank
     • Ethical investment - top heavy approach to deal with enviromment + social conditions

4. Trading Relationships + Patterns

   • Worlds Largest include NAFTA + EU
     • As already mentioned strong conflict between Protectionist + FT directions seen through multiple trade deals
       • Trans Pacific Partnership between USA + Australia + Brunei + Canada + Chile + Japan + Malaysia + Signapore + Vietnam - super shady but contains really fast growing countries - copyrights + finance + labour + envirommental standards
       • Between EU + USa - fuck financial + food safety + envirommental regulations - compaints about NHS + ISDS allows TNC sue governments
       • China part of G20 + BRICs against Western WTO + Group 77 + China = Africa + China: Africa gets investment = influence + untapped markets - West worried about Civil War - linked to Chinese industrial expansion eg Copper from Zimbabwe + Botswana - the Chinese
       • Latin America
         • Mercosa - 1991 Brazil + Argentina + Uruguay + Paraguay + Venezula traditional customs Union works like EU with free movement of labour
         • Pacific Alliance - Mexico + Peru + Chile + Columbia formed 2011 - less protectionistic + wants to make deals with USA + Pacific - growing quicly

5. SDT agreement = Special Differential Treatment = UN sponsered agreements where HICS give LICs a break

   • Recap LDCs have low levels of income + economy based on exporting primary goods + unpredictable price market for said goods
     • STDs help by increasing opptunities for export = more stable income + export diversification
       • Pros - Political + Moral rights to equality = subisidse more + less imports + WTO lax - Ecxample EU EBW allows Developing reduced quotas on everything but Weapons
       • Critique = depends on WTO membership = 8-10 years to gain + Doha recognised ineffiecency + LDCs don't use them + badly thought out + HICs fear cheap imports + unfair advantage - abandoened in favour of multetiral trade agreements eg Mexico with NAFTA

6. TNCs = Companies based in one company but who work in many different countries - usually headquatred in developed countries + have factories in undeveloped reasons = loosing trade barriers + find lowest production cost + exdploit resources + labour

   • They can have different functions across the World + sell across the World + control stages of production + Worldwide recognition
   • Spatial Organisation = 1st Country headquatre + other bases elsewhere + RaD there as well
   • Patterns of Production = usually in developing Countries have primary resources but sometimes eg fracking it is richer countries baring brunt + secondary (manufactoring) in NEE partially developed economies - less regulations + no welfare culture + TNC with services teriatery (call centres) work with low labour costs + education = India
   • Linkages Trading + Market Patterns - the two types of Intergration
     • 1) Vertical Intergarion - Company takes charge of primary + secondary + teriatary + organisation as one thing - BP has shipping fleet + oil piplines + exploration + production rights
     • 2) Horizontal merger - companies come together + cooperate + merge to do seperate - take food: Kraft Foods take Cadbury to get more in Confectionary market in 2010 Heinz then took Kraft for similat teasons
   • Cost/Benefit
     • Benefit for host Country Jobs + income + skills + technology: For TNC: low costs + low regulation + low wages + more resources with fewer envirommental restraints: + For TNC's country = cheaper resources + RaD to finance instead of factory work
     • Costs = for host country poor working conditions + exploitation of resources + loss of enviromment + local culture + profits leave: For TNC Costs for everybody else = bad PR: For Home country loss of manufacturing + deindustrialisation