Interantional Trade Theory and Policy

1. Interantional Trade Theory and Policy

2. Information Sites http://www.cofortune.com.cn/moftec_cn/ http://www.wto.org

3. International Trade Statistics Compiled and analyzed by the WTO's economists and statisticians, the figures provide comprehensive, comparable and up-to-date statistics on trade in merchandise and commercial services for an assessment of world trade flows by country, region and main product groups or service categories.

4. Chapter 1 Introduction

5. What is IT About • Its role in the systematization of Economics • What does IT study? • The gain from trade • The pattern of trade • Policy choice: Balance between free trade and protectionism • The framework of the IT

6. Its role in the systematization of Economics Microeconomics Macroeconomics EC International Trade International Economics International Finance

7. The gain from trade • When countries sell goods and services to one another ,this is almost always to their mutual benefit——that is to say, there are gains from the trade.

8. The pattern of trade Cloth Soybean IT Tulip Machine Oil Toy Tech

9. Era Reason Choice 15－17c Accumulate Protectionism Expanse Liberalism 18c Economic Crisis Protectionism 19c30s War-after Liberalism Mutual benefit Policy choice

10. Classical Trade Models Theory Neoclassical Trade Models Modern Trade Models IT Measurement Policy Welfare Effect International Cooperation (WTO) The Framework of IT

11. Fundamental Knowledge of IT • Conception • Measurement • Volume&Value • Trade Balance • Terms of Trade • Dependence Degree of Trade • Classify

12. Conception • International Trade(from the point of view of world) • Foreign trade(from the point of view of single country) • Export and Import • Trading Partner

13. Export and Import • Importsare goods and services purchased from foreign sources. • The U.S. imports over $1 trillion worth of goods and services. • Total imports represent 12% of total GDP. • Exports are goods and services sold to foreign buyers. • Exports were just under $700 billion in 2000. • Exports account for about 11% of total output.

14. Myanmar 1 Brazil 10 Exports in 1999 11 Japan United States 12 Germany 27 29 Great Britain Mexico 31 41 Canada Sweden 44 47 Kuwait 57 Thailand Belgium 73 0 10 20 30 40 50 60 70 80 90 100 EXPORTS (percentage of GDP) Exports in Relation to GDP

15. External Trade Performance in China (1978-2002) Sources: Statistical Yearbook of China, various issues.

16. Trading Partner Trading Partner of China in2003 Japan Others USA HK EU EU

17. Merchandise trade partner of the U.S. by region and economy, 2000

18. Volume=Value/Price Index P0Q1=P1Q1÷(P1 /P0)

19. Balance of trade(X-M) • Imports and exports are seldom equal. • The trade balance is the difference between exports and imports. X＝Export M=Import • Favorable balance (Surplus)——X-M>0 • Trade surplus— the amount by which the value of exports exceeds the value of imports in a given time period.

20. Balance of trade(X-M) • Unfavorable balance (Deficit)——X-M<0 • Trade deficit— the amount by which the value of imports exceeds the value of exports in a given time period • Any imbalance in trade in the world must be offset by reverse balances elsewhere in the world. • State(China & USA)

21. Trade Balance of China Billion Dollar Export Import Deficit or Surplus

22. Trade Balances of US • The U.S. typically has merchandise deficit, a services surplus, and an overall trade deficit.

23. Bilateral Trade Balances Top Deficit Countries

24. Bilateral Trade Balances Top Surplus Countries

25. Terms of trade • Terms of trade is the ratio of a country’s export price (Px) to its import price (Pm). • TOT = • The rate at which goods are exchanged • The amount of good A given up for good B in trade.

26. Changes in terms of trade • An improvement (or deterioration) in the terms of trade reflects an increase (decrease) in the per-unit gain from trade. • It measures the amount of import that a country can exchange with a unit of its export.

27. Terms of trade index • The terms of trade index is the ratio of the unit value index for total exports to the unit value index for imports, measured in the same base period. >1 Better off The Index of the Terms of Trade ＝1 no change <1 Worse off

28. Dependence Degree of Trade • Conception China World Thinking ：which condition is better for a country,big or small？

29. Trade Dependence Export Dependence Import Dependence China’s Dependence Degree of Trade

30. Classify of IT • According to the natural character • Tangible Trade（Merchandise Trade ） • Intangible Trade（ Commercial Services Trade） • According to the direction • Export & Import • Transit Trade

31. Classify of IT • According to the third party • Direct Trade, Indirect Trade • Entreport & Reimport • According to the Frontier • General Trade & Special Trade

33. Volume of World Merchandise Trade 1993-2000 (% change) Exports and Imports Source: WTO, International Trade Statistics, 2001

37. Commercial Services Trade • Conception • cross-border supply——Transportation • consumption abroad——Trip • commercial presence——Bank Filiations • movement of personnel——Building Contraction

38. World Trade in Services 1993-2000 (% change in value) Exports and Imports Source: WTO, International Trade Statistics, 2001

41. Re-import Direct trade Export Trade Import Trade Producing Area （China） Consumer Area （USA） Indirect trade Hong Kong Entreport Trade Transit Trade

42. Custom ①Import ④ Special Trade： Enter Custom ③ ②Export ① ② ③enter Frontier, but not enter Custom（Ex. Enter bonded warehouse） General Trade Frontier Free trade zone, bonded warehouse ④export to foreign countries from outside of Custom and inside of Frontier General Trade & Special Trade

43. Other Classifications • foreign exchange trade & barter trade • Bilateral trade & Multilateral trade • Documentary Trade & EDI (Electronic Data Interchange)

44. Electronic Data Interchange • Just in Time response to needs • Reduce time necessary to complete business transactions • Reduce faxing and phone calls • Increase accuracy • Conduct business in a paperless environment