International trade

Business english

International trade

Introduction

Trade = exchange, buy and sell, import and export...

Influence of new IT, fast transportation, lowering tariffs and cloud computing.

After WW2: new institutions and laws to regulate trade and promote peace.

Free trade:

- Definition (OECD, Organisation for Economic Co-operation and Development): goods and services can be bought and sold between countries or sub-national regions without tariffs, quotas or other restrictions.

- Expression coined by British economist John Stuart Mill (1806- 1873): “trade barriers are chiefly injurious to the countries imposing them.”

Without international trade, we would all be poorer and we would have fewer resources => no pineapples, no coffee, no cotton clothes, no foreign holidays... International trade benefits all participating countries.

Yet, totally free trade => problems to countries or to groups of people living in those countries. Many people are in favour of restricting trade.

History

 1930s: Great Depression

=> restriction of imports by the use of tariffs and quotas

=> protectionism +++

=> dramatic fall in world trade

After WW2: desire to reduce trade restrictions

2.1. Bretton Woods Agreement

1944: delegates from 44 countries met to reorganise the world's international financial system. Objective of US President Franklin D. Roosevelt and British Prime Minister Winston Churchill = ensure post-war prosperity through economic co-operation

Goals of the meeting:

- ensure a foreign exchange rate system

- prevent competitive devaluations

- promote economic growth

1971: end of the Bretton Woods system. The US put an end to convertibility of the US dollar to gold.

2.2. GATT: General Agreement on Tariffs And Trade

signed in Geneva by 23 countries, 30th October 1947 .

took effect on 1st January 1948. implemented to boost economic recovery

April 1947 - September 1986: eight “rounds”.

The 8 th round:

- in Uruguay.

- many more topics beyond tariffs were included in the main agenda, including intellectual property, agriculture and dispute settlement. - led to the creation of the WTO.

WTO created in January 1995

deals with the trade in goods and services and in inventions and designs.

WTO rules:

- non-discrimination = the principle of most-favoured nation (MFN) treatment.  trade concession a country makes to one member must be granted to all signatories. Exception: free-trade areas and customs unions (e.g. EU)

 reciprocity

 quotas are prohibited

 fair competition: discouraging unfair trade practices (e.g. dumping and export subsidies).

 binding tariffs

criticism of WTO laws has emerged:

- Undemocratic

- Privatise public utilities and services

- destroying the environment

- is killing people : « trade related intellectual property rights

2013: China became the largest trade country in the world + the second largest economy.

India's expansion => prosperity of the middle class in recent years. 10 of the 30 fastest growing urban areas are located in India.

Brazil = oil

...