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Trade Liberalization

Trade Liberalization. International Approach GATT WTO Regional Approach EU NAFTA. General Agreement on Tariffs and Trade The Agreement MFN Clause No Quotas Settlement of Trade Disputes Sponsorship of Multi-national Tariff Reduction Negotiations. The World Trade Organization

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Trade Liberalization

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  1. Trade Liberalization International Approach GATT WTO Regional Approach EU NAFTA

  2. General Agreement on Tariffs and Trade The Agreement MFN Clause No Quotas Settlement of Trade Disputes Sponsorship of Multi-national Tariff Reduction Negotiations The World Trade Organization Rules and Standards for Trade Policy Settlement of Trade Disputes Sponsorship of Multi-national Tariff Reduction Negotiations The International Approach

  3. Avg. Cuts in Tariffs 1934 - 1993 • Pre-GATT 1934-1947 33.2% • First Round 1947 21.1 • Second Round 1949 1.9 • Third Round 1950-51 3.0 • Fourth Round 1955-56 3.5 • Dillon Round 1961-62 2.4 • Kennedy Round 1964-67 36.0 • Tokyo Round 1974-1979 29.6 • Uruguay Round 1986-1993 33.3

  4. The World Trade Organization The WTO was created in 1995 to act as a forum for trade negotiations and serve as an impartial international court to resolve trade disputes. The WTO has had trouble with both roles: • The big boys (U.S. and E.U.) can’t agree. • The little guys feel cheated

  5. The Regional Approach The regional approach to trade liberalization requires some degree of economic integration. Economic integration is the process of abolishing discrimination among economic units belonging to different states by forming trade blocs.

  6. Types of Economic Blocs • A Free Trade Area • Tariffs among the participating countries are abolished, but each country retains its own tariffs against nonmembers. NAFTA • A Customs Union • Tariffs among the participating countries are abolished, and tariffs against nonmembers will be equalized.

  7. Types of Economic Blocs • A Common Market • Tariffs among the participating countries are abolished, a common set of external restrictions is adopted, and restrictions on factor movements are abolished. • An Economic Union • Combines the suppression of restrictions on commodity and factor movements with some degree of harmonization of national economic policies. The European Union (EU)

  8. Types of Economic Blocs • Total Economic Integration • Requires not only the unification of monetary, fiscal, social, and countercyclical policies but also the establishment of a supra-national authority whose decisions are binding for the member states. The United States of America

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