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Restrictions to International Business & International Trade

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Jennifer Lam

on 22 November 2013

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Transcript of Restrictions to International Business & International Trade

Exploring Global Business
Restrictions to International Business & International Trade Agreements
By Jennifer Lam and Rita Ohaya
International Trade Agreements
The General Agreement on Tariffs and Trade (GATT)

Tariff: tax to be paid on a particular class of imports or exports

GATT: An international organization of 153 nations dedicated to reducing or eliminating tariffs and other barriers to world trade

Final Destination
Types of Trade Restriction
Tariffs (aka import duty)
Revenue tariffs
Protective tariffs

Restriction to International Business
Type of Trade Restrictions
Reasons for Trade Restrictions
Reasons Against Trade Restrictions

International Trade Agreements
The General Agreement on Tariffs and The World Trade Organizations
The Kennedy Round
The Tokyo Round
The Uruguay Round
The Doha Round
The World Trade and Economic Crisis
International Economic Organizations Working to Foster Trade

Types of Trade Restrictions (cont.)
Nontariff Barriers
Government-imposed nontariff barriers
Import quota
Foreign-exchange control
Currency devaluation
Cultural nontariff barriers

Reasons for Trade Restrictions
To equalize a nation’s balance of payments
To protect new or weak industries
To protect national security
To protect the health of citizens
To retaliate for another nation’s trade restrictions
To protect domestic jobs

Reasons Against Trade Restrictions
Higher price for consumers
Restriction of consumers’ choice
Misallocation of international resources
Loss of jobs

Most-Favored-Nation status
GATT member nation was to be treated equally by all contracting nations
Ensured that tariff reductions or other trade concessions were extended automatically to all GATT members
The Kennedy Round: Succeeded in reducing tariffs on agricultural and industrial products by more than 35%
The Tokyo Round: Negotiated tariff cuts by 30-35% which were to be implemented over an 8 year period. And remove non tariff barriers as: import quotas, unrealistic quality standard for imports and unnecessary red tape in customs procedures
The Uruguay Round: negotiated reforms to expand the world economy by $200 billion annually. Also created World Trade Organization (WTO).
WTO was created byy GATT to oversee provisions negotiated at Urugay Round and resolve trade disputes.
Which of the following is a tariff barrier?
a) embargo

b) import quota

c) dumping

d) cultural barrier
Which of the following is a reason against trade restrictions?
a) Restriction of consumers' choices

b) To retaliate for another nation's trade restrictions

c) Loss of jobs

d) a and b

e) a and c

From 1947 to 1994 GATT sponsored eight rounds of negotiations to reduce trade restrictions. Three of the most rewarding were:
World Trade and Global Economic Crisis
In 2009 after the sharpest decline 12.2%, world trade was set to rebound in 2010 by growing at 9.5%.
Exports from developed countries expected to rise by 7.5%.
And from the rest of the world by 11%.
International Economic Organizations Working to Foster Trade
WTO: remove barriers to trade on a worldwide basis.
Economic community: nations formed to promote the free movement of resources and products among its members and to create common economic policies. For example: European Economic Community: freely conduct commerce among the nations involved and others that might later join.
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