GLOBAL TRADE RELATIONS – INTERNATIONAL POLITICAL ECONOMY


Welcome! To crash course of International Political Economy My name is Indira I’m Caroline I’m Caesa and I’m Rayi In this video we would like to explain to you about Global Trade Relations So, this will be a short introduction on Trade Relations The word ‘trade’ has been hitting arguments since the early ages Meanwhile, free trade has been prominent since the 700s While trade of conflicts are already prominent since the Middle Ages Typically, from trades there can arise two polarizing views On one hand, many parties argue that trade is beneficial As it brings wealth and it boosts the state’s economy Meanwhile, the other view is usually unfavorable because it threatens the domestic products and companies Usually these two views are in the form of trade liberalization and trade protectionism Now I’m going to explain about the trade theories First one is the liberals The ideas of Adam Smith and David Ricardo are still central to liberalism Ricardo’s theories of opportunity cost also contributes to liberalism Second one is Realist Trade as a more of a competition, where states compete to increase exports and decrease imports And the last one Historical Materialist Some also go further by asserting that DCs underdevelop LDCs or prevent them from achieving genuine autonomous development Britain lowered its import duties in 1815 and opened its borders to food imports by repealing its Corn Laws in 1846. Britain then signed a treaty with France in 1860 that results in the lowering of trade barriers throughout Europe Britain’s declining hegemony, France’s defeat in the Franco-Prussian War, and the 1873-1896 caused free trade to decline Efforts to establish free trade after WWI failed because belligerents of the war suffered from financial obstacles So now is the GATT To avoid the repeating trend of Protectionism after WW1 The US and Britain came to discuss bilateraly and they came up with the Havana Charter The Charter was used to arrange free trade between International Trade Organizations However, its establishment was delayed and in between the delay, an interim act was made, which is the GATT, the General Agreements on Tarrifs and Trade However, it was significantly more informal GATT was more of a club rather than an IO which makes it easier for members to waive regulations Because U.S. trade balance was deficit, they began accusing others of unfair trading, which lead to unilateral measures taken to ensure free trade Trade conflicts are often not resolved through GATT as it had weak dispute settlement mechanisms Many wanted to extend the GATT from trading of goods to trading of services, etc Principles of the Global Trade The first one is Liberalization An indication of liberalization includes lowering tarriffs, establishing non-tarriff barriers such as import bans Second one is the reciprocity State benefiting from another policies should provide roughly equal benefits And the third one is the development As more LDCs joined the GATT, more facilitation to them that allow them to diverge them from other principles And the fourth one is the safeguards States are allowed to occasionally raise import duties during critical times to protect domestic competition And the last one is nondiscrimination Treatment towards all members of the GATT should be the same and treatment towards imported goods must be same with domestic goods To overcome the weaknesses of GATT many countries have proposed to restore and replace the informal GATT to the WTO World Trade Organization is a formal and legal institution for trade, formed in 1995 based on the five principles of Global Trade Regime After WTO was formed GATT has reverted back to its orginal status as an agreement of trade followed by several new treaties There are new treaties negotiated during the Uruguay Round the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Intellectual Property Rights (TRIPs), and the Agreement on Trade-Related Investment Measures (TRIMs) WTO is designed to be more effective and authoritative Its status is legally comparable to the IMF and the World Bank Its dispute settlement system is binding also has made greater efforts to integrate developing countries In addition, WTO also converged the world economy to global trade regime by making more contacts to NGOs and civil society groups Despite its improvement from GATT, WTO still faces several shortcomings most of which are influenced by the GATT itself such as difficulty in states cooperation and oppression But many trade liberalist believe that the influence of WTO is really important in trade this is because WTO can avoid these states from refering back to protectionism and mercantilism also the WTO members can further renegotiate regarding agreements in agricultural and services trade the involvement of WTO is trade is also important for dispute settlement, such as the conflict between the EU and the US and lastly, it is important for the revival of global trade regime in both North and South In postwar era, only the developed countries were heavily involved in trade negotiations Meanwhile, the LDC has very little role and being unrecognized by the GATT For instance, during the 1960s most of these LDCs are still being colonized and others are still recovering from the imperialism itself Only until the 1980s, that the South became more aware of trade liberalization and more involved in global trade regime Up until now, most of the Southern countries are the primary exporters of raw materials needed for production of goods however, these countries are still poor in the socioeconomic condition therefore, most of them are still importing manufacturing goods from Northern countries Many EU countries joined GATT because GATT’s goal is having universal membership and the western policy differentiation In Europe, Poland, Romania, Hungary, Bulgaria joined GATT because of economic decentralization and its declining place towards market reform The other reason would be to provide trade concensus to increase imports In 1986, China wanted to be a full member of the GATT but was never admitted Because of its status as LDC and past records in implementing agreements as well as the requirements to liberalize the economy While Russia is the only major economy that is not in the WTO that Soviet economic system is considered as a incompatible system with the trade regime principles the rise in unemployment and decline in public sector is also one of the factor followed by the fear of Russia politicizing GATT and resulting to difficult trade concensus As wealth and prosperity increase, people will have more ability to take care of the environment The last one would be The Greens The Greens see freer trade as a cause of global environmental problems for a number of reasons Global trade contributes to environmental costs such as emitting more carbon footprint and trade increases consumption which puts the sustainability of the planet at risk And that’s the end of the Global Trade Relations crash course Thank your for watching!

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