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POSI 4359 Midterm

Texas State / Spring '10 / POSI Intl Economic Relations / Mihalkinin

PLAZA AGREEMENT - WHY The U.S. trade deficit reached crisis proportions politically and economically. Protectionist pressures from the trade deficit increased, forcing the U.S. to cooperate with other countries in a joint effort to manage exchange rates.
PLAZA AGREEMENT - WHO Group of Five – Finance ministers and central bankers from the U.S. Japan, United Kingdom, West Germany, and France
PLAZA AGREEMENT - WHAT The U.S. pledged to narrow its budget deficit by reducing spending All countries promised to coordinate exchange rates by reducing interest rates.
PLAZA AGREEMENT - RESULT (5) New era monetary Management. Finance ministers MET reg to coordinate exch rate intervention/attempt COORDINATION eco policy. '85-'87 $ VALUE declined. U.S. national debt REDUCED 1/3. 1988 exchange rates stable. ACTIVE entry JAP world MANAGEMT SYST.
PLAZA AGREEMENT - CONSEQUENCE 1970&80s – U.S. had huge trade deficits with Japan
NEW ECONOMIC POLICY - WHAT 1.Abolished exchange of gold for dollars 2. N. imposed 10% tariff on imports 3.Established wage and price controls 4. 12/1971 US government devalued dollar by 10% - ouch for Euro dollars. Feb. 1973 was the second devaluation of the dollar.
NEW ECONOMIC POLICY - WHY (3) Trade deficit. Gold reserves were at 10 billion by 1971. Euro-dollars were at 8 billion.
NEW ECONOMIC POLICY - RESULT Countries’ currencies began to float
HAVANA CHARTER - WHAT INT TRADE RULES– tariffs/preferences/quantitative restrictions/subsidies/state trading/ international commodity agreements. ITO CHARTER FOR TRADE OVERSIGHT, Special trade provisions for ECO DEV. IN LDCs. EU CONTINUATION OF PREFERENTIAL TRADE
HAVANA CHARTER - WHEN/WHERE 1947/Bretton Woods trade conference
HAVANA CHARTER - WHY First attempt to build a global legal regime for international trade and a product of strong U.S. leadership
HAVANA CHARTER - RESULTS (4) EBODIED EVERYONE’S WISHES, SATISFIED NO ONE. NEVER OPERATIONAL, B/C U.S. DOMESTIC POLICIES. Protectionist – “went too far” Free trade advocates – “not far enough” Truman – “would fail” CHARTER DEAD, POST U.S. WITHDRAWAL.
COMMON AGRICULTURE POLICY EU ACTION AGAINST FREE TRADE (+1) Blocked imports into the community and artificially stimulated competition in other markets by establishing high agriculture prices.
PREFERENTIAL TARIFFS EU ACTION AGAINST FREE TRADE (+1) Outlawed in the GATT rules of nondiscrimination- Lowered the level of manufactured goods from developing countries
EU ACTIONS AGAINST FREE TRADE - RESULT Increased the size of agricultural protectionist regime and existing preferential systemBecame a force of the extension of U.S. preferences. Many European countries did not link to the EU because of this
TOKYO ROUND - WHAT Response to the changed international trading system and to start the process of trade reform
TOKYO ROIUND - ACTIONS (6) Reduced MANUFACTURED GOODS TARIFFS, EST some non-tariff barrier CODE, Changed LDC GATT rules,EST subsidies/countervailing duty Tariffs,subsidies = NONtariff barriers, UILATERAL IMPOSITION OF countervailing duties when a subsidy led to material injurY
RECIPRICAL TRADE POLICY EXAMPLE MIDWAY BTWN Free trade/protectionism. Established DUMPING CODE (When a company sells a good below market price), Code on government procurement policies, NEW public government contracts BIDDING RULE FOR = TREATMENT, product standards /customs rules CODE
DOHA ROUND - WHY Large potential benefits to the world economy from liberalizing trade in agriculture
DOHA ROUND - WHAT Countries agreed they needed to take more into considerationFirst round between GATT and WTO that failed (no agreements) because developing and developed countries disagreed
DOHA ROUND - WHEN 2000-2007
DOHA ROUND - RESULT Increase in bilateral and regional trade agreements
COMECON - WHEN/WHY 1949 - The Soviet Unions and states of Eastern Europe (except Yugoslavia) created this in response to the Marshall Plan
COMECON - WHAT (2) - Pursued technical cooperation and joint planning- Main function was to reorient trade eastward and to buttress the new political relationship between the Soviet Union and Eastern Europe
COMECON - RESULT Eastern European trade was redirected from the West to the East.
MARRAKESH TREATY (5)WHEN/WHAT 1994 EsT WTO- old GATT FUNCTIONS /new procedures incl. a binding dispute settlement Provided further tariff CUTS. Rreduced AG subsidies. EliminATED textile /apparel quotas New trade rules for services, intellectual properties, and trade-related investment
WITTE SYSTEM - WHO (COUNTRY&PERSON) Russia/ Sergei Witte, minister of finance
WITTE SYSTEM - WHY To keep power
WITTE SYSTEM - CONSEQUENCES (8) Railroad construction doubled, Coal output tripled, Pig iron production quadrupled, Textiles = single largest industry, FAMINE persisted. urban working class CREATED, Massive strikes , Increase IN opposition of elite, peasant commune MIR DISSOLVES.
PERESTROIKA - WHAT Gorbachev’s reform to restructure the soviet economy
CAPITAL INVESTMENT - DIDN'T WORK, WHY? (3) - Loans, Volitivity of private capital, Prices for developing countries exports declined
CAPITAL INVESTMENT - THOUGH NECESSARY, WHY? (3) Developing countries don’t generate sufficient domestic capital for economic growth, FOREIGN CAPITAL NEED, Create a favorable business climate VIA privatization & LTD GOV spending
IMPORT SUBSTITUTION - WHAT Establishing high tariffs (protective) to protect new industry from foreign competition, To protect market & overtime the quality of the manufactured good will increase, so later one will reduce tariffs incrementally
IMPORT SUBSTITUTION - HOW (2) Initial quality of domestic manufactured goods was not as high as foreign manufactured goods. Already existing domestic market for foreign goods
COMMON MARKET - WHAT Economic Development Strategy. Goods need to be complementary, not competitive.
COMMON MARKET - HOW (3) - Increases market size & demand- Decreases cost per unit- Decreases prices, increasing demand.
COMMON MARKET - PROBLEMS (3) - Goods were not complementary- Low level of manufacturing- Unequal benefits from the common market
EXPORT LED INDUSTRIALIZATION - INDUSTRIAL POLICY [+1?] Intervening government in domestic economy to promote specific patterns of industrial government. The government will desire subsidies and tax preferences, government procurement policies, local content laws, & restrictions on technology transfers.
EXPORT LED INDUSTRIALIZATION - STRATEGIC TRADE POLICY (6) [+1?] [Intervention by gov to create comparative advantage in trade] Support for research and development (RND), Support high savings rate, AID to science/engineering/math EDUCATION, Export subsidies, Tax laws, Hinder foreign firms to access domestic market
Created by: goldmeg89