Transcript GROSS NATIONIAL PRODUCT

GROSS DOMESTIC PRODUCT
TOTAL
(trillion $)
PER CAPITA
($/person)
WORLD
37.0
7,600
U.S.
10.1
36,300
France
1.5
25,400
Spain
0.8
18,900
GROSS DOMESTIC PRODUCT
TOTAL
(trillion $)
INDUST.
(%)
AG.
(%)
SERV.
(%)
WORLD
37.0
32
4
64
U.S.
10.1
18
2
80
France
1.5
26
3
71
Spain
0.8
28
4
68
GDP and MERCHANDISE
TRADE
GDP
(billion $)
TRADE
(billion $)
TRADE/GDP
(%)
WORLD
37,000
6,300
13
U.S.
10,082
936
9
France
1,510
293
19
Spain
757
135
18
MERCHANDISE TRADE
EXPORTS IMPORTS
(billion $) (billion $)
WORLD
NET EXPORTS
(billion $)
6,300
6,300
0
U.S.
723
1,148
-425
France
293
293
0
Spain
119
150
-32
EXPORTS - PARTNERS
U.S.
France
Spain
•Canada (22%)
•Germany (14%)
•France (20%)
•Mexico (14%)
•UK (10%)
•Germany (12%)
•Japan (8%)
•Spain (9%)
•Portugal (10%)
•UK (6%)
•Italy (9%)
•Italy (9%)
•Germany (4%)
•U.S. (9%)
•UK (9%)
IMPORTS - PARTNERS
U.S.
France
Spain
•Canada (19%)
•Germany (17%)
•France (16%)
•Mexico (12%)
•Benelux (10%)
•Germany (16%)
•Japan (11%)
•Italy (9%)
•Italy (9%)
•China (9%)
•UK (8%)
•UK (7%)
•Germany (5%)
•U.S. (7%)
•U.S. (4%)
GDP and TRADE in SERVICES
GDP
(billion $)
TRADE
(billion $)
TRADE/GDP
(%)
WORLD
37,000
1,460
4
U.S.
10,082
226
2
France
1,510
71
5
Spain
757
45
6
TRADE IN SERVICES
EXPORTS IMPORTS
(billion $) (billion $)
WORLD
NET EXPORTS
(billion $)
1,460
1,460
0
U.S.
263
188
76
France
80
62
18
Spain
57
33
24
WORLD EXPORTS
4500
4000
Ag Products
3500
Mining Products
World Exports (1950 = 100)
Manufactures
3000
2500
2000
1500
1000
500
0
1940
1950
1960
1970
1980
Year
1990
2000
2010
WORLD AGRICULTURAL PRODUCTION AND EXPORTS
700
World Ag Production and Exports (1950 = 100)
600
Exports
500
Production
400
300
200
100
0
1940
1950
1960
1970
1980
Year
1990
2000
2010
WORLD PRODUCTION AND EXPORTS OF MANUFACTURES
World Production and Exports of Manufactures (1950 = 100)
4500
4000
3500
Production
Exports
3000
2500
2000
1500
1000
500
0
1940
1950
1960
1970
1980
Year
1990
2000
2010
WORLD GDP AND EXPORTS
12000
10000
World GDP and Exports (1950 = 100)
World Exports
World GDP
8000
6000
4000
2000
0
1940
1950
1960
1970
1980
Year
1990
2000
2010
TRADE BARRIERS
•
•
•
•
•
•
Tariffs
Quotas
Technical regulations and standards
Import licenses
Valuations of goods at customs
Preshipment inspections
TRADE DISTORTIONS
• Trade is “distorted” if prices and
quantities are different from the
levels that would usually exist in a
competitive market.
– Trade barriers
– Dumping
– Subsidies
WORLD TRADE
ORGANIZATION
• WTO was created in 1995
• But WTO replaced the General
Agreement on Tariffs and Trade
(GATT), which started life in
1948
WORLD TRADE
ORGANIZATION
• WTO was created in 1995
• But WTO replaced the General
Agreement on Tariffs and Trade
(GATT), which started life in
1948
WORLD TRADE
ORGANIZATION
• WTO is the only international
organization dealing with the global
rules of trade between nations
• WTO’s function is to assure that
trade flows as smoothly, predictably,
and freely as possible
WTO
• GATT dealt mainly with trade in goods
• WTO covers
– Trade in goods
– Trade in services
– Traded inventions, creations and designs
(intellectual property)
PRINCIPLES OF WTO
TRADING SYSTEM
1. Trade without discrimination:
– A country should not discriminate
between its trading partners
– A country should not discriminate
between its own and foreign products
(after foreign good entered the market)
1. Freer trade:
– Gradually, through negotiation
PRINCIPLES OF WTO
TRADING SYSTEM
3. Predictability:
– Through “binding”
– A country may change its bindings, but
only after negotiating with its trading
partners (which may mean compensating
them for loss of trade)
4. Promoting fair competition:
– Promote rules dedicated to open, fair and
undistorted competition
PRINCIPLES OF WTO
TRADING SYSTEM
5. Encouraging development and
economic reform:
– Agreements provide for special
assistance and trade concessions for
developing countries
WTO
• At the heart of WTO is the multilateral trading
system are WTO’s agreements, negotiated
and signed by a large majority of the world’s
main trading nations, and ratified in their
parliaments.
• The agreements are contracts, guaranteeing
member countries important trading rights.
• The agreements bind governments to keep
their trade policies within agreed limits
WTO AND AG TRADE
•
Governments usually give 3 reasons
for supporting farmers, even if doing
so distorts ag trade:
1. To make sure that enough food is
produced to meet the country’s needs
2. To shield farmers from the effects of
weather and world price volatility
3. To preserve rural society
WTO AND AG TRADE
•
Original GATT did apply to ag trade,
but had loopholes:
1. It allowed countries to use non-tariff
measures (e.g., import quotas)
2. Countries were allowed to subsidize
agriculture
WTO AND AG TRADE
•
Agricultural Agreement established
rules regarding:
1. Market access: Import restrictions
2. Domestic support: Subsidies and other
programmes, including those that raise or
guarantee farmgate prices and farmers’
incomes
3. Export subsidies and other methods used
to make exports artificially competitive
WTO AND AG TRADE
•
Agricultural Agreement does allow
governments to support rural
economies, but preferably through
policies that cause less trade
distortion
WTO AND AG TRADE
•
Agricultural Agreement establishes
the “tariffs only” rule for market
access
– If previous policy meant domestic
prices were 75% higher than world
prices, the tariff replacing it could be
75%
WTO AND AG TRADE
•
Agricultural Agreement establishes
three categories of “domestic
support”:
1. “Green Box”: Subsidies that do not
distort trade, or cause minimal trade
distortion (e.g., government services such
as research, disease control,
infrastructure, and payments to farmers
that do not stimulate production). “Green
Box” subsidies are allowed without limits.
WTO AND AG TRADE
•
Agricultural Agreement establishes
three categories of “domestic
support”:
2. “Blue Box”: Direct payments to farmers
where farmers are required to limit
production. At present, “Blue Box”
subsidies are allowed without limits.
WTO AND AG TRADE
•
Agricultural Agreement establishes
three categories of “domestic
support”:
3. “Amber Box”: Subsidies that so not fall
into either “Green Box” or “Blue Box.”
“Amber Box” subsidies are considered to
distort trade (e.g., price supports, or
subsidies directly related to production
quantities). “Amber Box” subsidies must
be reduced from the initial Total Aggregate
Measure of Support (Total AMS).
WTO AND AG TRADE
•
Agricultural Agreement prohibits
export subsidies on ag products,
unless the subsidies are specified in a
member’s list of commitments. Where
they are listed, the member must cut
both the amount of money spent on
export subsidies and the quantities of
exports that receive subsidies.
WTO
• The agreements bind governments
to keep their trade policies within
agreed limits
• WTO provides a mechanism for
settling disputes between
countries.