Transcript World Trade Agreements

World Trade Agreements
AGENDA
• Students will be able to identify key components of world trade
agreements.
• Students will summarize the basic terms of agreements
• Students will determine the economic benefits and consequences of
producers and consumers
NAFTA North American Free Trade Agreement
• Participating Nations:
Canada, United States, and
Mexico
NAFTA North American Free Trade Agreement
• Terms of Agreement:
• The goal of NAFTA was to eliminate barriers to trade and investment
between the U.S., Canada and Mexico. The implementation of NAFTA
on January 1, 1994 brought the immediate elimination of tariffs on
more than one-half of Mexico's exports to the U.S. and more than
one-third of U.S. exports to Mexico.
NAFTA North American Free Trade Agreement
• Economic benefits to Producers/Consumers:
• Canada received a modest positive economic benefit as measured by
GDP (Gross Domestic Product)
• One of NAFTA's biggest economic effects on U.S.-Canada trade has
been to boost bilateral agricultural flows
• Mexican factories that take in imported raw materials and produce
goods for export have become the landmark of trade in Mexico.
These are plants that moved to this region from the United States.
• Mexico has provided a growing market for meat for the U.S., leading
to an increase in sales and profits for the U.S. meat industry.
NAFTA North American Free Trade Agreement
• Economic Set-backs
• In the United States, as economist Robert Scott details, NAFTA has
eliminated some 766,000 job opportunities-primarily for non-collegeeducated workers in manufacturing.
• Mexico wages, benefits, and workers’ rights are deliberately
suppressed-are isolated from the rest of the Mexican economy. The
workers are paid much less to perform job duties.
• Canadians saw an upward redistribution of income to the richest 20%
of Canadians, a decline in stable full-time employment, and the
tearing of Canada’s social safety net.
NATO: North Atlantic Treaty Organization
• Participating Nations:
Military or defense alliance formed in 1949 by 12 countries in Western
Europe and North America today there are 28.
An alliance of nations with shared values. All members are
democracies.
NATO Members:
• Albania, Belgium, Bulgaria, Canada, Croatia, Czech
Republic, Denmark Estonia, France, Germany, Greece
Hungary, Iceland,
Italy, Latvia, Lithuania, Luxembourg, Netherlands,
Norway, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, Turkey,
United Kingdom, and United States
NATO: North Atlantic Treaty Organization
• Basic Terms of Agreement:
• Original purpose – to protect its members from a possible attack from
the Soviet Union
• Agreed if one member is attacked, they will all support and help
militarily.
• Has been the most important U.S. alliance for the past (almost) 60
years
NATO: North Atlantic Treaty Organization
• Economic Benefits:
NATO membership not only reduces the chances of conflict but -because NATO commits its members to a free-market economy -- it
reduces risk factors like nationalization and expropriation. Risk-averse
foreign investors, they say, will respond by pumping in more money.
NATO: North Atlantic Treaty Organization
• Economic Set-Backs:
• NATO entry will only burden government budgets and force huge
investments in military hardware of dubious economic value.
UN United Nations
• Participating Members
five permanent members: China, France, Russian Federation,
the United Kingdom, and the United States,
and ten non-permanent members elected for two-year terms
by the General Assembly (with end of term date):
Argentina (2014)
Australia (2014)
Chad (2015)
Chile (2015)
Jordan (2015)
Lithuania (2015)
Luxembourg (2014)
Nigeria (2015)
Republic of Korea (2014)
Rwanda (2014)
Non-Council Member States
More than 60 United Nations Member States have never been
Members of the Security Council.
African Group
Asia-Pacific Group
Eastern European Group
Latin American and Caribbean Group
(GRULAC)
Western European and Others Group
UN member not in any voting group
Non-UN state or territory
UN United Nations
Basic Terms of Agreement:
• to maintain international peace and security;
• to develop friendly relations among nations;
• to cooperate in solving international problems and in promoting
respect for human rights;
• and to be a center for harmonizing the actions of nations.
UN United Nations
• Economic Benefits:
The UN provides technical assistance and other forms of practical help
to countries around the world. In cooperation with the UN, they help
formulate policies, set standards and guidelines, foster support and
mobilize funds. The World Bank, for example, provided more than
$38.2 billion in development loans in fiscal year 2008 to nearly 100
developing countries.
UN United Nations
Economic Set-Backs:
• Because of financial hardships, rich countries are failing to
deliver on pledges. “We cannot afford to create a lost
generation of children who have been deprived of their
chance for an education that might lift them out of poverty.”
• Rich countries and international and financial institutions are
exaggerating how much aid they provide to help poor
countries cope with the financial crisis.
OPEC: Organization of the Petroleum Exporting Countries
• Participating Nations:
The Organization has a total of 12 Member Countries.
Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Later joined
by Qatar (1961), Libya (1962), the United Arab Emirates (1967), Algeria
(1969), Nigeria (1971), Ecuador (1973), and Angola (2007).
OPEC: Organization of the Petroleum Exporting Countries
OPEC: Organization of the Petroleum Exporting Countries
• Basic Terms of Agreement:
• OPEC agrees to coordinate and unify the petroleum policies of its
Member Countries and ensure the stabilization of oil markets in order
to secure an efficient, economic and regular supply of petroleum to
consumers, a steady income to producers and a fair return on capital
for those investing in the petroleum industry.
OPEC: Organization of the Petroleum Exporting Countries
• Economic Benefits:
A sharp decline in oil prices benefits oil importing nations and hurts oil
exporters. For importers, lower oil prices act similarly as a tax cut,
increasing consumer disposable income. This allows for looser
monetary policy, and hence lower interest rates with lower inflation
and stronger economic growth (as in the case of the US).
OPEC: Organization of the Petroleum Exporting Countries
• Economic Set-Backs
• Sharper oil prices, on the other hand, have been identified as a major
cause in seven out of eight post WW II recessions in the US.
CAFTA: Central America Free Trade Agreement
• Participating Nations:
CAFTA was created to expand corporate rights
to the poorest countries in Central America,
including Guatemala, Nicaragua, El Salvador,
Costa Rica, Honduras, and
the Dominican Republic.
CAFTA: Central America Free Trade Agreement
Basic Terms of Agreement:
CAFTA immediately eliminates all tariffs on 80 percent of U.S.
manufactured goods, with the remainder phased out over a few years.
Importantly, the agreement is not limited to manufactured goods, but
covers virtually every type of trade and commercial exchange between
these countries and the United States. It also strengthens regulatory
standards and environmental protections in Central America and the
Dominican Republic and provides for independent, outside monitoring.
CAFTA: Central America Free Trade Agreement
• Economic Benefits:
• Computer, electronic, aerospace, and information technology
products account for over a third of all U.S. exports to Central
America and the Dominican Republic. Medical devices and
pharmaceuticals, as well as agricultural products, account for a large
share of American sales to the six countries, as do textiles and
apparel.
• A rapidly growing market is growing even faster and yielding greater
opportunities for U.S. companies
CAFTA: Central America Free Trade Agreement
Economic Set-Backs
• Corporations now have more freedom than ever before to relocate to
whatever countries will provide the lowest wages and the loosest
regulations, lowering their costs to increase their profits. The textile
and apparel industry has taken advantage of this new dynamic like
few others.
• Loss of jobs for Americans
GATT: General Agreement on Tariffs and Trade
• Participating Nations:
160 members as of June 26, 2014
members
Draft Working Party Report or Factual Summary adopted
Goods and/or Services offers submitted
Memorandum on Foreign Trade Regime submitted
observer, negotiations to start later or no Memorandum
on FTR submitted
frozen procedures or no negotiations in the last 3 years
no official interaction with the WTO
GATT: General Agreement on Tariffs and Trade
• Basic Terms of Agreement:
• WTO (World Trade Organization)
• It’s an organization for liberalizing trade. It’s a forum for governments
to negotiate trade agreements. It’s a place for them to settle trade
disputes. It operates a system of trade rules.
GATT: General Agreement on Tariffs and Trade
• Economic Benefits:
Favors United States, United Kingdom, Europe Union, and Japan
Big Corporations, Big Banks
GATT: General Agreement on Tariffs and Trade
• Economic Set-Backs
• Weaker 3rd World countries have to pay large notes for banks to bail
them out when the WTO tells them not to charge a tariff. The farmers
can not make a profit to put back into the economy, so the nation
needs money to sustain.
Discussions:
• Why do we need trade regulations?
• What are the benefits and consequences for
consumers and producers?
• How can we as a society improve trade?