Essay about Chapter 6 International Business
The Political Economy of International Trade
OPENING CASE: Why Are Global Food Prices Soaring?
INSTRUMENTS OF TRADE POLICY
Tariffs Subsides Country Focus: Subsidized Wheat Production in Japan Import Quotas and Voluntary Export Restraints Local Content Requirements Administrative Polices Antidumping Policies Management Focus: U.S. Magnesium Seeks Protection
THE CASE FOR GOVERNMENT INTERVENTION
Political Arguments for Intervention Country Focus: Trade in Hormone-Treated Beef Economic Arguments for Intervention
THE REVISED CASE FOR FREE TRADE
Retaliation and Trade War Domestic Politics …show more content…
The second half of the chapter focuses on the development of the global trading system. A historical context is provided, along with a view of the global trading system as it exists today. The author acquaints the reader with the General Agreement on Trade and Tariffs (GATT) and the World Trade Organization.
Opening Case: Why Are Global Food Prices Soaring?
The opening case examines why global food prices are rising significantly. For more than two decades, improvements in agricultural productivity and output have contributed to lower food prices, but in 2007, the price of wheat was double its price of just a few months earlier, and the price of corn had risen some 60 percent. Two explanations for the phenomenon are increased demand, and the effects of tariffs and subsidies for bio-fuels. Discussion of the case can revolve around the following questions:
QUESTION 1: Food prices have risen dramatically since 2007. Reflect on the reasons for the price increase, and discuss the implications of higher prices for consumers in developed and developing countries.
ANSWER 1: For decades, consumers have enjoyed the benefits of increased productivity and output in the global food industry. In 2007, however, everything changed. The price of wheat