国际贸易理论Leture 16.pptVIP

Lecture 16 International Trade Agreements and the WTO By ZHANG Tianding the logic of trade agreements the history of international trade agreements and the workings of the WTO the role of preferential trade agreements, free trade areas and customs unions a primer on strategic trade policy Trade Wars and Trade Agreements Suppose we have two countries, Home and Foreign There are two goods, C and F Home has comparative advantage in C, Foreign in F Each country considers placing an ad valorem tariff on imports from the other country (t and t*) In deciding which tariff to pick, countries take as given the tariff chosen by the other country Prisoner’s Dilemma Problem Then each country will opt for protection, even though everyone is made worse off This is a Prisoner’s dilemma: trade agreement is a way-out History of Trade Agreements In 1930, the US passed a very stringent tariff law, the Smoot-Hawley Act (tariffs rose and US trade fell) Very soon, the government decided this tariff was a bad idea However special interests protected by the tariff made it very difficult to repeal History of Trade Agreements (cted.) The initial solution to this problem was bilateral negotiations, where concessions to US exporters were traded for reductions in US tariffs This was feasible, as it balanced the interests of exporters against those of importers History of Trade Agreements (cted.) The average duty on US imports fell from 59% in 1932 to 25% in 1945 Multilateral negotiations began after WWII ended A body called the International Trade Organization was proposed It ran into strong political opposition, especially in the US, and in fact was never established Instead, 23 countries began trade negotiations under some provisional rules known as the General Agreement on Tariffs and Trade (GATT) Eight rounds of trade negotiations were carried out under these rules until the final (Uruguay) round established the WTO in 1995 Over this 50 year period, restrictions on trade fell and the volume