International treading system

nternational trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political consequence has been on the rise in recent centuries.

Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the persistence of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders.

International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main distinction is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs related with country differences such as language, the legal system or culture.

Another difference between domestic and international trade is that factors of construction such as capital and labor are typically more mobile within a country than across countries. Thus international trade is mostly restricted to trade in goods and services, and only to a lesser extent to trade in capital, labor or other factors of production. Trade in goods and army can serve as a substitute for trade in factors of production.

Instead of importing a factor of production, a country can import goods that make intensive use of that factor of construction and thus embody it. An example is the import of labor-intensive goods by the United States from China. Instead of importing Chinese labor, the United States imports goods that were produced with Chinese labor. One report in 2010 suggested that international trade was enlarged when a country hosted a network of immigrants, but the trade effect was weakened when the immigrants became assimilated into their new country.

International trade is also a branch of economics, which, together with international finance, forms the larger branch of international economics.

n 1953, Wassily Leontief published a study in which he tested the validity of the Heckscher-Ohlin theory^. The schoolwork showed that the U.S was more abundant in capital compared to other countries, therefore the U.S would export capital-intensive goods and import labor-intensive goods. Leontief found out that the U.S's exports were less capital intensive than its imports.

After the appearance of Leontief's paradox, many researchers tried to save the Heckscher-Ohlin theory, either by new methods of measurement, or either by new interpretations. Leamer emphasized that Leontief did not interpret H-O theory as it should be and claimed that with a right interpretation, the paradox did not occur. Brecher and Choudri found that, if Leamer was right, the American workers' burning up per head should be lower than the workers' world average consumption. Many textbook writers, including Krugman and Obstfeld and Bowen, Hollander and Viane, are negative about the validity of H-O model. After examining the long history of empirical research, Bowen, Hollander and Viane concluded: "Recent tests of the factor abundance theory [H-O theory and its developed form into many-commodity and many-factor case] that openly examine the H-O-V equations also indicate the rejection of the theory."

In the early 1900s a theory of international trade was developed by two Swedish economists, Eli Heckscher and Bertil Ohlin. This theory has later been known as the Heckscher-Ohlin model (H-O model). The results of the H-O model are that countries will produce and export goods that require resources (factors) which are relatively abundant and import goods that require resources which are in comparative short supply.

In the Heckscher-Ohlin model the pattern of international trade is determined by differences in factor endowments. It predicts that countries will export those goods that make intensive use of locally abundant factors and will import goods that make intensive use of factors that are locally scarce. Empirical problems with the H-O model, such as the Leontief paradox, were noted in empirical tests by Wassily Leontief who found that the United States tended to export labor-intensive goods despite having an abundance of capital.

The world trading system has undergone massive changes in the last sixteen years. The creation of the WTO and the development of enforceable international rules governing trade in services and intellectual property rights as well as trade in cargo vastly expanded the scope and effectiveness of the system. While bilateral negotiations have stalled, countries around the world have accelerated their involvement in regional trade agreements. This seminar will examine the implications of these developments, providing a careful analysis of the WTO, Uruguay Round Agreements, and of regional trade agreements. The course will also cover the techniques of negotiating trade agreements. The program is designed as a practical course that will assist trade officials in their work and help enterprises to take full advantage of the opportunities provided by multilateral and regional trade agreements. The course motivation be taught by former and present senior government trade officials and negotiators, leading academics, practitioners, and officials from multinational organizations, and will include site visits to U.S. government trade agencies and the United States Congress.

The Millennium Development Goals establish a global partnership to improve the lives of the world’s poor. This includes an open, rule-based, predictable, evenhanded trading and financial system as an important goal. Can trade be a tool for development? In many cases current trade rules do not contribute to sustainable development. In agriculture, most relevant to developing countries, trade is heavily distorted by artificially cheap world prices. Developing countries have few tools to protect themselves from these distortions. besides the current system of trade regulations is far from being a predictable, consistent system. Among the main sources of inconsistency are the many bilateral and regional agreements setting different trade rules for different countries. The number of these agreements has dramatically increased since the start of the World Trade Organisation.

international treading system

 

The major trading partners of the developed world – the United States and the European Union among others - negotiate bilateral trade agreements almost every week, while at the same time pretending to negotiate pro-development multilateral trade rules at the WTO as part of the Doha Development Round. Even for the current round of negotiations at the WTO – in particular in agriculture – but also other areas of negotiations such as services and industrial products - the proposed rules are mainly designed to further open markets, despite the damage this approach has wrought over the last 10 years. What is necessary is more detailed analysis and debate on which rules are needed to improve the lives of people in poor countries.

Global trade in agricultural produce is a mess. The mix of national policies and multilateral rules has contributed to plunging commodity prices. Farmers around the world – particularly family farmers - have been forced off their land because they can no longer make a living. Trade policy refugees from rural areas flood cities without enough jobs or housing. Every international institution, from the UN and its agencies to the WTO itself, blames the agricultural trade practices of rich countries for devastating rural communities in developing countries. Yet the same policies have damaged rural communities in developed countries too. Food security – people’s ability to feed themselves and their families with adequate and culturally appropriate food – has suffered everywhere.

The WTO is the focus of international efforts to solve this problem. No one thinks it can be the only solution, but efforts to reform agriculture in developed countries are firmly rooted there. The debate at the WTO has centred on three aspects of agricultural policy: domestic support, tariffs and export subsidies. Experts declare all three to be damaging to global agriculture and trade rules place restrictions them. But current WTO talks to tighten the rules are in deadlock. The proposals now on the table reflect the domestic politics of WTO members, especially developed countries, and the export interests of multinational agrifood firms which trade in commodities and processed food. WTO negotiators have ignored the economic and social needs of developing countries and poor people. Even if governments at the WTO were miraculously to eliminate all the trade-distorting elements of agricultural policy, world markets would not magically start to improve the welfare of developing countries. WTO efforts fail to target the biggest factor distorting markets, namely dumping, the export of products at prices below their production cost. Worse, the present WTO agricultural agreement, and proposed changes, fail to incorporate binding commitments to comply with fundamental goals such as upholding the human right to food and establishing a resilient rural sector as a basis for economic development. The WTO Agreement on Agriculture has failed rural communities around the world. It also has enhanced environmental degradation by promoting a more industrialised model of agriculture characterised by monoculture, intensive use of herbicides and pesticides, large units for breeding livestock, and heavy dependence on oil needed to ship and transport goods. The successor of the current Agreement on Agriculture, now under negotiation, is set to perpetuate this failure.

A serious attempt to achieve the MDGs would require a change in the overall direction of policies on agriculture, food and trade. International trade rules must be based on an understanding of the root causes and problems in agriculture and trade. International trade rules must include a ban on dumping and new criteria for subsidies, curtailing all subsidies supporting excess production for export. Inventory management needs to be introduced for key crops that are deliberately traded with the sole aim of increasing the price of commodities. Rules are also required to regulate market concentration and establish the right of countries to protect their agriculture from dumped imports or import surges that would harm their own agricultural production.

To achieve this the negotiation process must become more democratic, it being almost impossible to reach a good agreement through bad process. WTO negotiations go on allowing only a handful of countries to reach an agreement, leaving the full governing body only a short time to consent to a done deal. The Doha Round is typical of this approach.

For the sake of millions of people we cannot allow another bad agreement. It is high time for an objective assessment of whether WTO rules have benefited people, or merely boosted cross-border trade statistics. It is time to frame policies that discipline all sources of market distortion and to measure success against the imperative of meeting internationally agreed development benchmarks. Only such an agreement will help achieve the MDGs and reduce poverty.

The Millennium Development Goals establish a global partnership to improve the lives of the world’s poor. This includes an open, rule-based, predictable, non-discriminatory trading and financial system as an essential goal. Can trade be a tool for development? In many cases current trade rules do not contribute to sustainable development. In agriculture, most relevant to developing countries, trade is heavily distorted by artificially cheap world prices. Developing countries have few tools to protect themselves from these distortions. Furthermore the current system of trade rules is far from being a predictable, consistent system. Among the main sources of inconsistency are the many bilateral and regional agreements setting different trade rules for different countries. The number of these agreements has dramatically increased since the start of the World Trade Organisation.
By Alexandra Strickner and Sophia Murphy, Institute for Agriculture and Trade Policy – Geneva Office

The major trading partners of the developed world – the United States and the European Union among others - negotiate bilateral trade agreements almost every week, while at the same time pretending to negotiate pro-development multilateral trade rules at the WTO as part of the Doha Development Round. Even for the current round of negotiations at the WTO – in particular in agriculture – but also other areas of negotiations such as services and industrial products - the proposed rules are mainly designed to further open markets, despite the damage this approach has wrought over the last 10 years. What is necessary is more detailed analysis and debate on which rules are needed to improve the lives of people in poor countries.

Global trade in agricultural produce is a mess. The mix of national policies and multilateral rules has contributed to plunging commodity prices. Farmers around the world – particularly family farmers - have been forced off their land because they can no longer make a living. Trade policy refugees from rural areas flood cities without enough jobs or housing. Every international institution, from the UN and its agencies to the WTO itself, blames the agricultural trade practices of rich countries for devastating rural communities in developing countries. Yet the same policies have damaged rural communities in developed countries too. Food security – people’s ability to feed themselves and their families with adequate and culturally appropriate food – has suffered everywhere.

international trade

The WTO is the focus of international efforts to solve this problem. No one thinks it can be the only solution, but efforts to reform agriculture in developed countries are firmly rooted there. The debate at the WTO has centred on three aspects of agricultural policy: domestic support, tariffs and export subsidies. Experts declare all three to be damaging to global agriculture and trade rules place restrictions them. But current WTO talks to tighten the rules are in deadlock. The proposals now on the table reflect the domestic politics of WTO members, especially developed countries, and the export interests of multinational agrifood firms which trade in commodities and processed food. WTO negotiators have ignored the economic and social needs of developing countries and poor people. Even if governments at the WTO were miraculously to eliminate all the trade-distorting elements of agricultural policy, world markets would not magically start to improve the welfare of developing countries. WTO efforts fail to target the biggest factor distorting markets, namely dumping, the export of products at prices below their production cost. Worse, the present WTO agricultural agreement, and proposed changes, fail to incorporate binding commitments to comply with fundamental goals such as upholding the human right to food and establishing a resilient rural sector as a basis for economic development. The WTO Agreement on Agriculture has failed rural communities around the world. It also has enhanced environmental degradation by promoting a more industrialised model of agriculture characterised by monoculture, intensive use of herbicides and pesticides, large units for breeding livestock, and heavy dependence on oil needed to ship and transport goods. The successor of the current Agreement on Agriculture, now under negotiation, is set to perpetuate this failure.

A serious attempt to achieve the MDGs would require a change in the overall direction of policies on agriculture, food and trade. International trade rules must be based on an understanding of the root causes and problems in agriculture and trade. International trade rules must include a ban on dumping and new criteria for subsidies, curtailing all subsidies supporting excess production for export. Inventory management needs to be introduced for key crops that are deliberately traded with the sole aim of increasing the price of commodities. Rules are also required to regulate market concentration and establish the right of countries to protect their agriculture from dumped imports or import surges that would harm their own agricultural

The Doha Round is the latest round of trade negotiations among the WTO membership. Its aim is to achieve major reform of the international trading system through the introduction of lower trade barriers and revised trade rules. The work programme covers about 20 areas of trade. The Round is also known semi-officially as the Doha Development Agenda as a fundamental objective is to improve the trading prospects of developing countries.

The Round was officially launched at the WTO’s Fourth Ministerial Conference in Doha, Qatar, in November 2001. The Doha Ministerial Declaration provided the mandate for the negotiations, including on agriculture, services and an intellectual property topic, which began earlier.

In Doha, ministers also approved a decision on how to address the problems developing countries face in implementing the current WTO agreements.

production.This article addresses an important and complex subject relating to the link between international law and economic development. There is broad agreement that trade liberalization and participation in foreign markets play an important role in economic development. Countries in Sub-Saharan Africa (SSA) have generally pursued a liberalization route over the past two decades, but their economic performance has been deeply disappointing. In this article, we look at seven countries in the Horn of Africa and examine, from legal and institutional perspectives, the central question of why these countries have failed to translate their comparative advantage, particularly in the livestock sector, into meaningful trade-led economic growth. In order to answer this question, we have reviewed the relevant legal and policy instruments and the literature, visited five of the seven countries, and interviewed different players in the livestock value chain. Analysis of the evidence reveals that the main impediments to trade relate to rising sanitary import requirements in foreign markets and weak institutional capacity within the Horn. The limited technical and financial resources available to these countries also reduce their capacity to meet these standards. Meaningful institutional change requires substantial involvement of local actors and it takes place incrementally and over the long-term. International law can play a role in this process by promoting rule of law and tackling corruption, facilitating capacity building, and encouraging regional integration.

To achieve this the negotiation process must become more democratic, it being almost impossible to reach a good agreement through bad process. WTO negotiations go on allowing only a handful of countries to reach an agreement, leaving the full governing body only a short time to consent to a done deal. The Doha Round is typical of this approach.

For the sake of millions of people we cannot allow another bad agreement. It is high time for an objective assessment of whether WTO rules have benefited people, or merely boosted cross-border trade statistics. It is time to frame policies that discipline all sources of market distortion and to measure success against the imperative of meeting internationally agreed development benchmarks. Only such an agreement will help achieve the MDGs and reduce poverty.

The news of Warren Buffet making his biggest bets on the stock market in 2011 this year on August 8th when the S&P 500 Index suffered its most recent plunge also helped in lifting the market spirits worldwide. Warren Buffet, the CEO of Berkshire Hathaway Inc. and one of the famous living investors in the world exact words were, “I like buying on sale.”

Businessweek.com reported that Goldman Sachs Group Inc. said Google’s $12.5 billion purchase of Motorola Mobility may be positive for Asian Android-phone makers as it helps reduce litigation risk. The stocks worldwide are showing signs of recovery after the most recent stock market turmoil that happened on the downgrading of the US debt rating from AAA to AA+ some days back. This downgrading had raised concerns in the global markets about the weakness of US economic recovery.

This volatility in the stock market is confusing a lot of traders and investors around the world. Gold prices are reaching unprecedented heights as most of these nervous traders and investors are running towards the supposed safe haven of gold. Many analysts are of the view that the global economy is in serious trouble. But the most important question is should that change the way you trade or invest?

Chuck Hughes is a stock trader who has been trading for a number of years now. Chuck used to work as an airline pilot when he started stock and options trading in his spare time instead of playing golf. But he is not some ordinary stock trader. He won not one but seven live international trading championships with annual gains as high as 315% over the years. However, the most interesting thing is that he became seven-time international trading champion by remaining agnostic on a host of issues: Whether the stock market is going to go up or whether it is going to go down, whether gold is overpriced or under priced, whether the dollar is in trouble or is going to recover.  This allows Chuck to ignore 99% of what is being written about the markets by analysts and so-called experts. Instead, he focuses on the only thing that matters, and what matters is CASH FLOW – where the money is going!

international trade