Download PP 430

PP 430
Seminar 8
Seminar 8
• International Agencies and Policies
• Unit 8 Assignment
The Big Picture
• The goal of this unit is to present the “big
picture” of International Trade and its impact
on U.S. Economic Growth and Development.
• As such, learning its institutional framework
before proceeding to more specific policies
and their effects is paramount.
The Big Picture
• Given its intricacy and ubiquity, International
Trade demands credible government
institutions and policies.
• Promoting coordination and cooperation
among over 160 trading nations could not
happen without The World Trade Organization
(WTO), the International Monetary Fund
(IMF), the World Bank, Customs Unions, and
Free Trade Areas.
Agencies
• World Trade Organization (WTO): The official
international organization charged with
mediating trade disputes among nations
• International Monetary Fund (IMF):
International agency designed to help fix
trade- and currency-related problems across
nations, thereby encouraging Economic
Growth and Development
Agencies
• World Bank: The international lender of last
resort, using funds from the Advanced nations
to promote Economic Growth and
Development in Developing countries
• Customs Union: The adoption of tariffs at the
same rate across participating nations
• Free Trade Area: The practice of Free Trade
within a specific collection of nations
The Big Picture
• The important point to appreciate here is why
so many nations, including the U.S., submit to
these institutions on questions of trade and
the promotion of Economic Growth and
Development.
• They risk losing national sovereignty by doing
so, but do it anyway.
The Big Picture
• What is their logic for doing so? It comes
down to efficiency and self-interest. Better
trade flows mean more wealth overall; it is an
investment in their long-term economic wellbeing.
• In the case of the U.S., there are national
policies and institutions at work as well.
The Big Picture
• For example, the “Commerce Clause” of the
Constitution clearly delegates all power to
regulate U.S.-related commerce, both
interstate and international, to Congress.
• It is a broadly defined power, giving Congress
much leeway to define “regulation,” but its
jurisdiction is unquestioned.
The Big Picture
• The U.S. Congress takes this power and, here
too, delegates it to, not international
organizations, but the executive branch (i.e.,
the President) to negotiate treaties which are
then taken directly to the Congress for an upor-down vote, no amendments.
The Big Picture
• This is called “Fast Track Authority.” It
represents Congress forgoing its right to
amend treaties for the sake of quick passage
of trade bills. These can be with both
“Advanced” and “Developing” countries.
The Big Picture
• In addition to goods and services is the
financial side of international trade. This
includes nations’ Capital Accounts and both
Portfolio and Foreign Direct Investment.
• Capital flows are considered good indicators
of other nations’ assessments of a country’s
economic conditions, both present and future.
The Big Picture
• In short, before proceeding to analyses of
particular trade policies, you must appreciate
the governing institutional organizations and
general trade policies.
• This unit provides such a working background.
Discussion Questions
• Why nations delegate away some of their sovereignty
to international organizations in order to promote
trade on the assumption that doing so helps their
Economic Growth and Development.
-What does America gain by submitting to the World
Trade Organization and contributing to the World Bank
and International Monetary Fund?
-What does Congress get by granting the President
‘Fast-track Authority’?
Unit 8 Assignment
• Debate the proposition, “International
agencies and policies that promote free trade
are good for economic growth and
development in the United States.”
– For this assignment, in a 1-2 page position paper,
debate your ‘side’ of the above proposition.
– The purpose of a debate is to argue the ‘pros’ and
‘cons’ about an issue and persuade the audience
that your position is more valid than the other
side’s position
Unit 8 Assignments
• Read Chapter 19 in your Taylor text and
Chapter 12 in your Todara text
• Participate in Discussions
• Submit your Unit 8 Assignment