International Trade Theory & Policy - Term Paper Example

Comments (0) Cite this document
Name: Course: Date: International Trade Theory & Policy Question 1 The GAAT was a multilateral agreement that was established between countries in 1947, which sought to effect a reduction in tariffs and other trade barriers that could hinder the effective undertaking of trade between countries…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.8% of users find it useful
International Trade Theory & Policy
Read TextPreview

Extract of sample "International Trade Theory & Policy"

International Trade Theory & Policy Question The GAAT was a multilateral agreement that was established between countries in 1947, which sought to effect a reduction in tariffs and other trade barriers that could hinder the effective undertaking of trade between countries. GAAT also sought to eliminate regional preferences and thus create a trading environment where all the countries were better placed to undertake trade with each other, without unnecessary prohibitions (GATT, 12). The enactment of this agreement occurred in six rounds, where different aspects of the agreement were agreed, until the final round when all the agreements were then consolidate to form the final agreements, which lasted until 1994, when they GAAT was then replaced by the World Trade Organization. However, the original objectives of GAAT continue to be executed under the umbrella of World Trade Organization (GATT, 33). The objectives of the GAAT were achieved gradually, with minimal achievements in the first and the second round, but a major achievement in the 3rd round, where the countries under negotiations agreed to effect $2.5 billion in tariff reductions (GATT, 11). These concessions kept increasing, with a notable achievement in the 4th round, where a concession worth $4.9 billion of world trade was agreed. This increased in the 5th round with a concession worth $40 billon, and in the 6th round the highest concession of more than $300 billion being agreed upon (GATT, 27). By the close of the eighth round, major breakthroughs had been made, which eventually saw the agreeable reduction of trade barriers between countries, and thus the creation of a more favorable environment for undertaking trade. Question 3 The 8th round of the GATT was proposed to continue advancing the move to enhance trade between countries with minimal restrictions and barriers to trade. Nevertheless, for President Reagan, his proposal for the 8th round was to expand the kind of products that the GATT covered under its tariff removal schemes, and to expand the coverage of the GATT competence to include such products as textiles and services, while preventing the inclusion of agricultural products (Epstein, 7). The president was particularly interested in protecting the agricultural products from the USA from being prone to the tariff regulations that were being established for the other products, and protect the interest of the United States' Export Enhancement Program (Epstein, 12). The 8th round also sought to establish the rules of operation of GATT, establish the necessary non-tariff measures, while also establishing the necessary dispute resolution mechanism that could be applied to resolve the disputes arising amongst the member countries (Epstein, 3). Nevertheless, the 8th round almost came to a stall, with major disagreements arising majorly between some of the European countries, which later came to be known as the Cairns group, and the USA. The main issues was the fact the GATT was operating under double standards, where it required the countries involved under the agreement to liberalize their economies, while giving the USA a waiver for its agricultural products (Epstein, 10). This threatened to collapse the 8th round meeting, and was also the major cause of the failure of the subsequent 1st World Trade Organization meeting. Question 6 Since the establishment of the GATT, the Least Developed Countries (LCDs) have been implored upon to focus on trade as their route to economic growth. However, there has been a looming controversy surrounding this advice. The greatest history of controversy operates on the subject of liberalization, where the developed and hence most powerful countries who are the majority members of the institution, have been pushing for the liberalization of certain sectors of the economies of the LDCs (Chaudhry, 162). This has given the developed countries an upper hand, since they ensure the LDCs are vulnerable to the abolition of the tariffs, while the developed countries benefit in trading freely with such countries. The operation of the GATT has been observed to advance the interests of the developed countries, while the LCDs have been sidelined (Chaudhry, 99). The developed countries are known to push for the incorporation of products which favor then into the GATT tariff regulation system. Such countries have introduced services, intellectual property rights and are now even pushing for the inclusion of government procurements, amongst the products to have their tariffs reduced or regulated (Chaudhry, 133). Considering that currently WTO has 132 country members, amongst which 98 are developed countries and only 34 are developing and least developed countries, the developed countries pushes for their agenda through, while all the time, arguing that resolutions are adopted through a democratic process. Under the current position as it is, the LDCs are the biggest losers of the establishment of the institution, since they are forced to liberalize, thus making their economies weak and prone to revenue reductions through reduced taxes, while the developed countries continue to enjoy the benefit of free trade (Chaudhry, 142). Works Cited Epstein, Susan B. GATT: The Uruguay Round Agreement and Developing Countries. Washington, D.C.: Congressional Research Service, 1995. Print. Chaudhry, Arijay. Gatt: A Developing Country Perspective. New Delhi: Asian Books, 2002. Print. GATT: What It Is, What It Does? Geneva: General Agreement on Tariffs and Trade, 1991. Print. Read More
Cite this document
  • APA
  • MLA
(“International Trade Theory & Policy Term Paper Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from
(International Trade Theory & Policy Term Paper Example | Topics and Well Written Essays - 750 Words)
“International Trade Theory & Policy Term Paper Example | Topics and Well Written Essays - 750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF International Trade Theory & Policy

International trade theory

...? International trade theory Table of Contents Answer to Question 3 Answer to Question 2 3 Answer to Question 3 4 Answer to Question 4 4 Answer to Question 5 5 Answer to Question 6 6 Answer to Question 7 6 Answer to Question 8 7 References 7 Answer to Question 1 According to mercantilist views, the amount of assets or wealth that the world is endowed with is constant and that the only way that a nation can attract it within its perimeters is to follow a protectionist trade policy. However, this school of thought is almost futile in describing present day economics of nations almost all of whom participate in international...
6 Pages(1500 words)Essay

International Trade Theory & Policy

...? International Trade Theory & Policy International Trade Theory & Policy Ricardian model of international trade The Ricardian model focuses primarily on the quantities of labor needed to produce traded goods, and from this, the element of comparative advantage. The model portrays a world encompassing two countries, both using a single production factor (labor) to yield two goods. This model purports a fixed quantity of labor is required in order to yield a single output unit of each good in each of the two countries despite the quantity produced as a whole (Jonathan & Kortum, 2002). The model further assumes that all markets conducting trade are perfectly competitive; hence goods are priced according to costs within the countries... costs...
4 Pages(1000 words)Essay

International trade theory and policy

...Sur Supervisor International Trade Theory and Policy Part A Q: Discuss the motives, nature and purpose of the original GATT (General Agreement on Tariffs and Trade), and the extent to which this purpose was achieved in the first six rounds of negotiations (through the mid-60s). Answer The preamble of GATT describes about the motives and purpose of forming it. Full employment, increased standards of living through steady growth of income and to make full use of world resources to expand the production base and exchange of goods were the motives behind formation of the GATT (World Trade Organization). Before the end of World War II,...
6 Pages(1500 words)Term Paper

Developments in european & pacific rim trade keep a good trading relation with the EU. The different measures taken by the EU and China shall be considered in terms of aggregate demand and supply to fully understand whether or not they are efficient.First of all, it may seems that regarding the quotas, the European Union may have adopted the notion of First-Come, First-Served which may lead, during the year to a fluctuation of the price and consequently the European textile sector could regain its losses during the year. (International Trade Theory & Policy, Steven Suravonic ) When measures such as quotas are taken, it has several effects on different actors of the economy such as the consumer...
8 Pages(2000 words)Essay

International Trade - World Trade

...International Trade As reported by the World Trade Organisation in 2005, world trade in merchandise grew at an average of 7 percent per year between 1955 and 2004. Identify and critically discuss four factors that may have contributed to this over this period. 30% (600 WORDS) Much have been written about the factors contributing to the marked growth of trade between the years 1955 and 2004. Several factors have been mentioned and speculated to have contributed to such growth. However, I personally believe that the four factors that may have contributed to the growth in merchandise in world trade between 1955 and 2004 are the following,...
8 Pages(2000 words)Essay

Is International Trade Driven By Theory

...IS INTERNATIONAL TRADE DRIVEN BY THEORY? TABLE OF CONTENTS Page 3 2 Introductions 4 3 What is Theory? 4 4 International Business Theories 6 5 Conclusions 9 6 Bibliography 10 1 Abstract It is generally understood that all events are explainable and controlled by theories. The Criticism of Theory as a construct by Thomas Kuhn was highlighted and contrasted with the scientific approach to theory expounded by P.D.Reynolds. It was explained that defining theory was difficult and one way of defining was by defining what theory was...
7 Pages(1750 words)Essay

Business and Canadian Government Policy - International Trade Policy

...Business and Canadian Government Policy - International Trade Policy Table of Contents Introduction 3 Thesis ment 3 Rationale and Supporting Evidence 4 Normative Analysis 5 Positive Analysis 5 Economic Analysis 7 Impact on business in Canada 8 Conclusion and Recommendations 9 References 10 Dicken, P. (2003). Global shift: reshaping the global economic map in the 21st century. London, UK: Sage. 10 Kennedy, P. (November 22, 2010). Canadian stock exchanges eye expansion in China. Stock House. Retrieved November 23, 2010, from 10 Nickel, R. (November 19, 2010). Canada: China...
10 Pages(2500 words)Term Paper

International Trade Theory

...time, the fundamental principle underlying international trade is more or less similar to the principle, on which domestic trade is founded (International Trade Theory and Policy). In essence, the chief purpose of trade is to maximize profits for the entities involved in the exchange of goods and services. A number of forms are assumed by the economic integration of countries. Some of these are preferential tariffs, customs unions, free – trade associations, common markets, economic unions and complete economic integration. Nations belonging to a specific system of preferential tariffs,...
2 Pages(500 words)Essay

Politics of international trade policy

...Full Politics of International Trade Policy (Its Two Components) 13 June (estimated word count = 679) Politics of International Trade Policy The international trade policy of a country has important consequences on its citizens because it affects everybody, although admittedly, the effect can be not uniform at times. This is the case when a country opens its domestic economy through liberalization policies by the decision to join certain trade organizations, such as the World Trade Organization or WTO. It is incumbent on the...
2 Pages(500 words)Essay

International trade theory

... International trade theory and policy Several theories have been in put in place by governments in trying to enhance the economic stability of their nations. Some of the theories such as Mercantilism explain how excessive exports lead to inflation. On the other hand, if a country imports more than what it produces then, the prices of such commodities goes down resulting into economic imbalance and this lowers the living standard (Pomfret 107). Based on the theory of absolute advantage, Adam Smith clarified that, it is possibility for a country to make higher production than an opponent given same condition. Therefore, a country should only specialize in the production of its efficient commodity. Interpreting this account... to the...
1 Pages(250 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Term Paper on topic International Trade Theory & Policy for FREE!

Contact Us