The Political Economy of Trade Policy

What is the political economy of trade policy? Many government policies have both a political and an economic aspect. That is true of social security, housing policy, farm policy, support for research, and much more. In all of these cases, the economics of the...

The EU and Brexit

How was the EU formed? The European Union (EU) started out as the European Coal and Steel Community (ECSC) with six member nations (Belgium, France, Germany, Italy, Luxembourg, and the Netherlands). The underlying motive for forming the ESC and for subsequent economic integration was...

Do Trade Deficits Matter?

President Trump has repeatedly insisted that each country’s bilateral trade deficit with the US is an indication of unfair trade practices. Trump has made the reduction of bilateral deficits an objective of trade negotiations, including those with China, the two NAFTA trading partners, and...

What’s Wrong with Protection?

Winston Churchill has often been quoted as saying that “democracy is the worst possible form of government except for all the others.” It might equally be said that “free trade is the worst possible trade policy except for all the others.” Although the logic...

China

How did China change? In 1982, China was an extremely impoverished developing country with such sluggish growth that it is arguable whether living standards had risen at all in the previous several decades. China had been virtually irrelevant in the international economy: it had...

Preferential Trading Arrangements

What are preferential trading arrangements? The GATT/WTO articles call for nondiscrimination among trading partners. But as mentioned earlier, Article 24 provides for an exception. Countries may enter into a preferential trading arrangement (PTA) under conditions described later. Many PTAs are now in force around...

Trade Remedies

What are trade remedies? The term “trade remedies” describes those cases when it is permissible for tariffs to be raised above their bound levels under GATT/WTO rules. As described in Chapter 11, under GATT/WTO auspices members have agreed in MTNs to gain...

Case Studies of Protection for Manufacturing Industries

Why look at manufacturing protection? In Chapter 4, it was seen that free trade would maximize the goods and services available in the nation’s economy and with enough left over to support those who do not gain from free trade. One set...

How Much Protection Is There in Agriculture?

The fundamental issues in trade policy—keeping rule of law, national treatment, and nondiscrimination—are the same for all international trading nations and all types of trade. In order for there to be trade, rules and understandings have to be established. The weaker the legal basis...

Developing Countries

Are developing countries different? Prior to the Second World War, there were advanced countries, there were planned economies, including the Soviet Union, and there were very poor countries. Most of the those in the last category were colonies of one of the advanced countries...