INTERNATIONAL MARKETING 6e Chapter 2 International trade Institutions and U.S. Trade Policy
INTERNATIONAL MARKETING 6e International Trade Institutions and U.S. Trade Policy Chapter 2
The historical dimension n Ancient Traders Rome and the pax romana European Feudalism in the Middle Ages Protectionism in the 1930s and Hawley-Smoot Act The Emergence of Global Division (1945) Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-2 The Historical Dimension Ancient Traders Rome and the Pax Romana European Feudalism in the Middle Ages Protectionism in the 1930’s and Hawley-Smoot Act The Emergence of Global Division (1945)
A Brief hi iStory of in ternate al Business onai Pax romana The "Roman Peace"ensured that merchants were able to travel safely and rapidly on roads built, protected, and maintained by the Roman legions European Feudalism By delivering a portion of their earnings to a protector, medieval farmers were shielded from the depredations of outsiders While local economies were largely closed, East-West export /import trade thrived Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-3 A Brief History of International Business Pax Romana • The “Roman Peace” ensured that merchants were able to travel safely and rapidly on roads built, protected, and maintained by the Roman legions. European Feudalism • By delivering a portion of their “earnings” to a protector, medieval farmers were shielded from the depredations of outsiders. While local economies were largely closed, East-West export /import trade thrived
A Brief History.. continue Protectionism in the 1930s and the Smoot-Hawley Act The Act raised import duties to reduce the volume of imports into the United states with the intent of fostering increased domestic employment. World trade collapsed as other nations countered with raised duties and tariffs of their own Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-4 A Brief History … continued Protectionism in the 1930’s and the Smoot-Hawley Act • The Act raised import duties to reduce the volume of imports into the United States, with the intent of fostering increased domestic employment. World trade collapsed as other nations countered with raised duties and tariffs of their own
The Emergence of Global Division(194 The post-war East and West ideological split The Soviet Union and the eastern bloc Council for Mutual Economic Assistance(CMEA or COMECON 53 Western countries The International Trade Organization(TO)-1948 o Pax Americana The"American Peace" ensuring safety in the Western world from 1945 to 1990 helped world trade grow dramatically. Copyright 2001 by Harcourt, Inc. All rights reserved 5
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-5 The Emergence of Global Division (1945) The post-war East and West ideological split • The Soviet Union and the Eastern Bloc – Council for Mutual Economic Assistance (CMEA or COMECON) • 53 Western countries – The International Trade Organization (ITO) - 1948 Pax Americana • The “American Peace” ensuring safety in the Western world from 1945 to 1990 helped world trade grow dramatically
Transnational nstitutions and World Trade o General agreement on Tariffs and trade (GATT World Trade Organization (WTO) International Monetary Fund(IMF) World bank Regional Institutions Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-6 Transnational Institutions and World Trade General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) International Monetary Fund (IMF) World Bank Regional Institutions
General Agreement on Tariffs and Trade GATT focused on reducing prevailing high tariffs Was a able to reduce tariff from 26 to 5%US) Flow trade via bilateral trade agreement voluntary trade restraints undermined GAT GaTT didn't cover services The Uruguay round N , each member country of the Gatt must grant Most-Favored Nation(MFN) clause every member country the most favorable treatment it accords to any other country with respect to imports and exports Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-7 General Agreement on Tariffs and Trade GATT focused on reducing prevailing high tariffs. -Was a able to reduce tariff from 26 to 5% (US) -Flow trade via bilateral trade agreement, voluntary trade restraints undermined GATT -GATT didn’t cover services -The Uruguay Round Most-Favored Nation (MFN) clause • “… each member country of the GATT must grant every member country the most favorable treatment it accords to any other country with respect to imports and exports
World Trade Organization (WTO)1995 General Agreement on Trade in Services(GATS Trade-related aspects of intellectual property rights (TRIPS, Trade-related investment measures (TRIMS Problems around wto Environmentalists concern Labor union s fear Developed nations concern Countries may lose their sovereignty -Positive expectations More expansion for MNC and Global Violators of trade agreement, trade secrets and copy rights can be punished Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. World Trade Organization (WTO) 1995- • General Agreement on Trade in Services (GATS) • Trade-related aspects of intellectual property rights (TRIPS) • Trade-related investment measures (TRIMS) -Problems around WTO – Environmentalist’s concern – Labor union’s fear – Developed nations’ concern – Countries may lose their sovereignty -Positive expectations – More expansion for MNC and Global – Violators of trade agreement, trade secrets and copy rights can be punished
The International Monetary Fund (IMF) Developed out of the Bretton Woods Agreement in 1944 Offers gold and constituent currencies available to members for currency stabilization Special Drawing rights (sdR) an index of currencies available to each member in the / MF Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. 2-9 The International Monetary Fund (IMF) Developed out of the Bretton Woods Agreement in 1944. Offers gold and constituent currencies available to members for currency stabilization. Special Drawing Rights (SDR) • an index of currencies available to each member in the IMF
International Monetary Fund(IMF)-1944 Regulates the international monetary system Helps member countries during currency fluctuations Helps countries to move from soft to hard currencies Helps countries to fight against black market for hard currencies Helps countries during their privatization and restructuring of their economies Copyright 2001 by Harcourt, Inc. All rights reserved
Copyright © 2001 by Harcourt, Inc. All rights reserved. International Monetary Fund (IMF) – 1944 • Regulates the international monetary system • Helps member countries during currency fluctuations • Helps countries to move from soft to hard currencies • Helps countries to fight against black market for hard currencies • Helps countries during their privatization and restructuring of their economies
