International Economics: Trade Policy Overview

1. International EconomicsPart 4 Dr. Stefan Kooths BiTS Berlin(winter term 2013/2014) www.kooths.de/bits-ie

2. Outline • Introduction and Overview • Systemizing and Recording Cross-border Economic Activity • The Pure Theory of International Trade • Trade Policy: Free Trade vs. Protectionism • Protectionism: Goals and instruments • Tariffs • Nontariff-barriers to trade • Export subsidies (dumping) • Economic integration and multilateral trade policy • Free trade: Pros and cons • Foreign Exchange Markets and the Open Macroeconomy • Case Study: The Euro Area Crisis • Summary: The Key Lessons Learnt

3. Goals of protectionism

4. Mercantilism

5. Tariffs vs. nontariff barriers to trade

6. Outline • Introduction and Overview • Systemizing and Recording Cross-border Economic Activity • The Pure Theory of International Trade • Trade Policy: Free Trade vs. Protectionism • Protectionism: Goals and instruments • Tariffs • Nontariff-barriers to trade • Export subsidies (dumping) • Economic integration and multilateral trade policy • Free trade: Pros and cons • Foreign Exchange Markets and the Open Macroeconomy • Case Study: The Euro Area Crisis • Summary: The Key Lessons Learnt

7. Tariff as a tax on imports

8. Types of custom duties • Specifictariff • Ad valoremtariff

9. Effect on domestic producers

10. Effect on domestic consumers

11. Government revenues

12. Net national effect

13. Terms-of-trade effect: Small vs. large countries

14. Nationally „optimal“ tariffs

15. Outline • Introduction and Overview • Systemizing and Recording Cross-border Economic Activity • The Pure Theory of International Trade • Trade Policy: Free Trade vs. Protectionism • Protectionism: Goals and instruments • Tariffs • Nontariff-barriers to trade • Export subsidies (dumping) • Economic integration and multilateral trade policy • Free trade: Pros and cons • Foreign Exchange Markets and the Open Macroeconomy • Case Study: The Euro Area Crisis • Summary: The Key Lessons Learnt

16. Types of nontariff barriers

17. Import quotas: Small country analysis

18. Allocating import licenses • Fixed favoritism • Auction • Resource-usingprocedures

19. Import quotas: Large country analysis

20. „Voluntary“ export restraints

21. Other nontariff barriers • Productstandards • Domesticcontentrequirements • Governmentprocurement

22. Outline • Introduction and Overview • Systemizing and Recording Cross-border Economic Activity • The Pure Theory of International Trade • Trade Policy: Free Trade vs. Protectionism • Protectionism: Goals and instruments • Tariffs • Nontariff-barriers to trade • Export subsidies (dumping) • Economic integration and multilateral trade policy • Free trade: Pros and cons • Foreign Exchange Markets and the Open Macroeconomy • Case Study: The Euro Area Crisis • Summary: The Key Lessons Learnt

23. Dumping vs. fair market value • „Normal“ value • Comparative (pricescharged in domesticmarket) • Cost-based (sellingbelowaveragecost)

24. Types of dumping • Predatory • Cyclical • Seasonal • Persistent (pricediscrimination)

25. Small exporting country analysis

26. Large exporting country analysis

27. Retaliation

28. Strategic trade policy: Boing vs. Airbus (1/2)

29. Strategic tradepolicy: Boeing vs. Airbus (2/2)

30. Outline • Introduction and Overview • Systemizing and Recording Cross-border Economic Activity • The Pure Theory of International Trade • Trade Policy: Free Trade vs. Protectionism • Protectionism: Goals and instruments • Tariffs • Nontariff-barriers to trade • Export subsidies (dumping) • Economic integration and multilateral trade policy • Free trade: Pros and cons • Foreign Exchange Markets and the Open Macroeconomy • Case Study: The Euro Area Crisis • Summary: The Key Lessons Learnt

31. Stages of economic integration

32. Regional economic integration Source: http://en.wikipedia.org/wiki/File:Economic_integration_stages_(World).png

33. Trade creation and trade diversion

34. Other effects of economic integration • Increase in competition (reducingmonopoly power) • Lowerprices (staticefficiency) • Higher productivity/lowercost of production (dynamicefficiency) • Lowercostbyexpandingscales of production • More opportunitiesforbusinessinvestments (FDI)

35. Case study: The European Union

36. Trade embargoes

37. International trade disputes

38. GATT and WTO • GATT (1947) • General Agreement on Tariffs and Trade • WTO (1994) • World Trade Organization • www.wto.org

39. Outline • Introduction and Overview • Systemizing and Recording Cross-border Economic Activity • The Pure Theory of International Trade • Trade Policy: Free Trade vs. Protectionism • Protectionism: Goals and instruments • Tariffs • Nontariff-barriers to trade • Export subsidies (dumping) • Economic integration and multilateral trade policy • Free trade: Pros and cons • Foreign Exchange Markets and the Open Macroeconomy • Case Study: The Euro Area Crisis • Summary: The Key Lessons Learnt

40. First best vs. second best

41. Costs of protection • Loss of welfare (deadweightlosses) • Foreignretaliation • Enforcementcosts • Renk-seekingcosts • Rentstoforeignproducers (VERs) • Dynamic inefficiencies (loss of dynamicefficiency)

42. Externalities

43. Promoting domestic production or employment

44. The infant industry/dying industry arguments

45. Public revenues

46. Noneconomic objectives • „National pride“ • National defense • Domesticincomeredistribution