The Nature and control of trade

1. The Nature and control of trade • List as many ways and examples of controlling trade in the global system

2. International Trade • The world trade system is essential a western ‘free trade’ one • The USA and EU have been very influential at the World Trade Organisation in the past • The World’s three major stock markets (London, New York and Tokyo) are all in the ‘west’ • In a globalised world, TNCs play a crucial role in world trade, and most TNCs originate in the EU and USA • Emerging superpowers, especially China, have taken advantage of global trade to develop and grow

4. Role of the WTO • P 156 Oxford

5. How is world trade controlled? The WTO

6. WTO: Purpose Overriding purpose is to help trade flow as freely as possible — so long as there are no undesirable side-effects To abolish or reduce trade barriers

7. WTO: What is It? http://welkerswikinomics.com/blog/2010/10/07/obamas-bad-decision/ • World Trade Organization • An international organisation which oversees a large number of agreements defining the "rules of trade" between its member states • An organization for liberalising trade (free trade – no restrictions on companies) • A forum for governments to negotiate trade agreements • A place for governments to settle trade disputes

8. Principles • The trading system should be … • Without discrimination • Freer • Predictable • More competitive • More beneficial for less developed countries

9. WTO: History • Creation on 1 January 1995 • The biggest reform of international trade since after the Second World War • brought to reality the failed attempt in 1948 to create an International Trade Organization • The trading system is half a century older • GATT provided rules for the system • Differences: • GATT dealt with trade in goods • WTO now covers trade in services, and in traded inventions, creations and designs (intellectual property)

10. The Case for Open Trade • Data show a definite statistical link between freer trade and economic growth • Protectionism leads to bloated, inefficient producers supplying consumers with outdated, unattractive products • In the end, factories close and jobs are lost despite the protection and subsidies

12. Doha Trade Talks Launched in 2001 Disagreement over liberalizing farm trade foiled talks in Cancun 2003 In 2004, rich countries pledged to cut agricultural subsidies Failures in Geneva 2006 and Potsdam 2007 further damaged the Doha round

13. Doha Continued In July of 2008, trade ministers came close to a deal, agreeing on 18 of the 20 topics Disputes over protecting farmers in developing economies from import surges ruined the nine day meeting

14. How is world trade controlled? Task: Complete the two flow diagrams showing how the WTO works

15. Criticisms The WTO Is Fundamentally Undemocratic The policies of the WTO impact all aspects of society and the planet, but it is not a democratic, transparent institution. The WTO rules are written by and for corporations with inside access to the negotiations. Even simple requests for information are denied, and the proceedings are held in secret. Who elected this secret global government? Local policies aimed at rewarding companies who hire local residents, use domestic materials, or adopt environmentally sound practices are essentially illegal under the WTO. Developing countries are prohibited from creating local laws that developed countries once pursued, such as protecting new, domestic industries until they can be internationally competitive.

16. http://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm http://news.bbc.co.uk/1/hi/world/europe/country_profiles/2429503.stm http://www.globalexchange.org/campaigns/wto/OpposeWTO.html

17. The WTO has protected for pharmaceutical companies' 'right to profit' against governments seeking to protect their people's health by providing lifesaving medicines in countries in areas like sub-Saharan Africa, where thousands die every day from HIV/AIDS. The WTO Tramples Labour and Human Rights The UN reports that the richest 20 % of the world's population consume 86 % of the world's resources while the poorest 80 % consume just 14 %. WTO rules have hastened these trends by opening up countries to foreign investment and thereby making it easier for production to go where the labour is cheapest and most easily exploited and environmental costs are low. The WTO supposedly operates on a consensus basis, with equal decision-making power for all. In reality, many important decisions get made in a process whereby poor countries' negotiators are not even invited to closed door meetings -- and then 'agreements' are announced that poor countries didn't even know were being discussed. WTO policies have allowed dumping of heavily subsidized industrially produced food into poor countries, undermining local production and increasing hunger. The WTO Is Destroying the Environment e.g. The WTO declared illegal a provision of the Endangered Species Act that requires shrimp sold in the US to be caught with an inexpensive device allowing endangered sea turtles to escape. Which box refers to each of these problems: Environmental, death of the poorest, exclusion of poor countries, unfair competition for farmers, increasing inequality

18. Discuss what views the following people may have on the WTO: • Chinese Textile worker working 20hr shifts in Shenzhen • An Egyptian fresh goods entrepreneur • A Burmese military dictator funding the army through tobacco plantations • A local government representative in Chile • An AIDs doctor in South Africa • A CEO of a TNC based in the USA • Textile factory worker recently laid off in South Carolina • A college student in the UK

19. Bullet point three explanations of the ways the WTO can be used to maintain superpower status?. Consider subsidies (p156,) fairness of votes, influence of TNCs… • What are the benefits of the WTO for the world? • Heroes or villains. Why do some people decide to protest against the WTO? Produce a power point display to explain this. http://www.wto.org/english/thewto_e/whatis_e/tif_e/tif_e.htm http://news.bbc.co.uk/1/hi/world/europe/country_profiles/2429503.stm http://www.globalexchange.org/campaigns/wto/OpposeWTO.html

20. What is wrong with the current global trading system? • Describe and explain the patterns shown

21. Free Trade? • Much of the current trade takes place between countries which are members of a trade bloc e.g. EU as it tends to be tariff free • Developing countries outside a trade bloc have trade barriers which prevent access to markets

22. China’s interest in Africap92-93 and 97 Pearson • Africa did not have a diplomatic and economic policy with USA, Europe or Japan • China began trading with Africa to the sum of $32 billion in 2005 (an increase of $29 billion since 1995) • 1/3 rd of China’s energy imports come from China Critics: • An example of neo-colonialism • Support for Zimbabwe etc – legitimising dictatorships • China supports Sudan enough though the government supported the genocide in Darfur

23. TASK: • China’s investment in Africa an example of Neo-colonialism or south-south development? • Evaluate how far you agree with the above statement