Huec 4044 Trade Polices And Regulations Part 1

Front 1

Trade

Back 1

buying and selling or bartering of goods and/or services.

Front 2

International trade

Back 2

exchange of goods and/or services across political boundaries

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Export Policy

Back 3

efforts to sell domestically produced goods and services in foreign markets

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Import Policy

Back 4

policy-determines the relative availability of foreign-made goods and services in domestic markets.

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Protectionism

Back 5

seeks to use trade barriers to minimize imports

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Free trade

Back 6

relies on market forces to determine the volume and variety of imports

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Fair Trade

Back 7

emphasizing social responsibility, emerges as a component of the development of trade policy today

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Reciprocal Trade Agreements Act of 1934

Back 8

allowed the executive branch of the U.S. government to negotiate up to 50 percent reduction in tariff rates as long as the other countries reciprocated the reductions

The most-favored nation (MFN) principle was included

bilateral agreements

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General Agreement on Tariffs and Trade (GATT) (1947–1994)

Back 9

Primary purpose was to reduce trade barriers, particularly tariffs and quotas, among its members
(Removal of trade barriers and limited the use of nontariff trade barriers)


also dealt with a wide range of commercial policies

The most-favored nation (MFN) clause

Special privileges to developing nations without requiring these nations to obey all of the rules

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Uruguay Round

Back 10

during the late 1980s and early 1990s created WTO

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GATT exceptions

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Antidumping (AD)

Countervailing Duty (CVD) laws

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Antidumping (AD)

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allow a country to raise tariffs on certain products when other countries sell their products at "less than reasonable value" in the importing country, and when the imports cause injury to import-competing firms

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Countervailing Duty (CVD) Laws

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a country to place a countervailing duty (i.e. a tariff on imports) to countery the effects of a foreign government subsidy on an imported product when the imports cause injury to domestic import-competing firms

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Safeguards Clause

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allows countries to raise a tariff, temporarily, when a surge of imports causes injury to import-competing domestic firms

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Short Term Arrangement, 1961
(Under GATT)

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to restrict 64 categories of cotton textile imports and to avoid market disruption for a one-year period

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Long Term Arrangement, 1962-73
(Under GATT)

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Protect importing countries from market disruption

Limited volume growth of imports to 5% per year

Covered imports of natural-fiber (cotton) textiles and apparel

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Multifiber Arrangement (MFA) (1974–1994)

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Restrictions on cotton

Developing countries shifted their production to MMF

The US initiated bilateral agreements extending the Long Term Arrangement to also cover man-made textile materials with Hong Kong, Japan, Korea, and Taiwan

A general framework for determining the conditions under which textile and apparel trade could be controlled

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Aggregate ceiling

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the total amount a country could export to the developed country in any one year under terms of its bilateral agreement

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Square yard equivalent (now square meter equivalent)

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was an overall measure of trade in physical terms

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Unilateral trade restraints

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restrictions by one country without negotiation.

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MFA- Quota system

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Established norms by which annual growth in imports of 6 percent is implemented

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Swing (Flexibility Provision)

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use a portion of the unfilled ceiling of one category for another category

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Carryover (Flexibility Provision)

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use some of any unused ceiling from one agreement year to apply to the subsequent year’s ceiling

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Carry Forward (Flexibility Provision)

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borrow from next year’s ceiling to apply to the present year’s level

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Flexibility Provision

Back 25

Swing

Carryover

Carry Forward

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MFA III (1981-86)

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Conflicts among countries

Tighter restrictions on products made of MMF and Wools

Required proof of market disruption

Rules of Origin

Efforts to open developing countries’ markets

Anti-surge provision

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MFA IV (1986-91)

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Additional fibers- cover more fibers

Allowed unilateral restraints

No Cut back or tightening of quotas

Poorer countries given more favorable treatment

Cotton and wool production in developed countries received special consideration

Quotas raised and poorer countries couldn’t keep up

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Impact of MFA on Industry

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Added protection

Product categories that did not exist previously

Retailers: Price increase & added uncertainty

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Impact of MFA of Consumers

Back 29

Increased price

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Impact of MFA on Global Trade

Back 30

Restricted quantity from certain countries

Dispersed apparel production in the world

Complicated trade procedures

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Criticism of MFA

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Discrimination against poorer exporting nations

Was not a world-wide agreement

Instant product, country specific solution

Increased management cost and conflict

Transshipping

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WTO (1994-Present)

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Result of Uruguay Round

Operate on the same fundamental assumptions as GATT

Freer trade
MFA --> ATC (Agreement on Textiles and Clothing)

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WTO Terms

Back 33

facilitate the implementation of the trade agreements

a permanent forum for member governments to address their multilateral trade relations

Commitments of the entire membership

Covers trade in goods, services, and issues related to intellectual property(GATT covered only goods)

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The Agreement on Textiles and Clothing (ATC)

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Phase out the MFA quota system.

Complete the MFA phase out process over a 10-year period to be completed by December 31, 2004.

Reintegrate the textiles and clothing sector into the WTO, the new world trading system

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Impact of ATC on Industry

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Protection is gone

Lower cost imports

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Impact of ATC on Consumers

Back 36

Lower price and diversity

Some concerned consumers

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Unfair Trade/Competition

Back 37

Commercial activity that tends to confuse, mislead, or deceive customers and provide unfair business advantages

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Unfair Practices by Exporters

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Dumping

Export subsidies vs. countervailing duties

Higher restrictive tariffs

Closed market

Foreign aids

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Reasons of Trade Policies

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Import growth

Unemployment

Investment protection

Competitiveness disadvantages

Burden sharing

Political prowess

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Justification of Policy Strategies

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Maintaining employment

Slowing pace of adjustment

Preserving industries

Supporting industries

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Problems of Trade Policies

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Development of new suppliers

Shift in production line

Shift in fiber categories

Upgrading products

Guaranteed market access

Establishment of foreign owned plants in the importing market