IB7012-2 Econwk 3
IB7012-2 Econwk 3 IB7012
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This 8 page Class Notes was uploaded by JC11 on Friday April 8, 2016. The Class Notes belongs to IB7012 at 1 MDSS-SGSLM-Langley AFB Advanced Education in General Dentistry 12 Months taught by in Spring 2016. Since its upload, it has received 13 views. For similar materials see Global Economic Environment in Economcs at 1 MDSS-SGSLM-Langley AFB Advanced Education in General Dentistry 12 Months.
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Date Created: 04/08/16
NORTHCENTRAL UNIVERSITY ASSIGNMENT COVER SHEET Student: THIS FORM MUST BE COMPLETELY FILLED IN Follow these procedures: If requested by your instructor, please include an assignment cover sheet. This will become the first page of your assignment. In addition, your assignment header should include your last name, first initial, course code, dash, and assignment number. This should be left justified, with the page number right justified. For example: Save a copy of your assignments: You may need to resubmit an assignment at your instructor’s request. Make sure you save your files in accessible location. Academic integrity: All work submitted in each course must be your own original work. This includes all assignments, exams, term papers, and other projects required by your instructor. Knowingly submitting another person’s work as your own, without properly citing the source of the work, is considered plagiarism. This will result in an unsatisfactory grade for the work submitted or for the entire course. It may also result in academic dismissal from the University. IB70128 Richard Thompson, PhD Global Economic Environment Assignment 4 Faculty Use Only <Faculty comments here> <Faculty Name> 2 Introduction The World Trade Organization (WTO) plays a significant role in international trade. While it’s overall purpose is not to create laws but to provide a forum and mechanism for resolving trade disputes among member nations. This week’s assignment not only helps to provide a deeper understanding of the many aspects of the multilateral trade negotiations, but provides insight into those issues and the related consequences in trade and economic policy making. In addition, there have been no official resolutions to resolving controversies in regards to agricultural subsidies and intellectual property rights. The following areas will be discussed further: (a) the history, purpose, and role of WTO in world trade, (b) challenges, unresolved issues, and mechanism of world trade relations, (c) conflicting views on the role of agricultural and other subsidies in world trade, (d) the nature of intellectual property rights (IPRs) controversy and proposed resolution, and (e) policy interests of developing and developed nations in international settlement issues. World Trade Organization The Worth Trade Organization (WTO) was brought into existence on January 1, 1995 and was formed out of a multilateral trade agreement on tariffs and trade which was called the GATT (Carbaugh, 2013). The GATT, otherwise known as the general agreement on tariffs and trade, was originally formed in 1947 to decrease trade barriers and place all nations on equal footing. Essentially, the GATT was a set of agreements that was put into place establishing a broad set of rules for commercial policy in the international community (Carbaugh, 2013). As of 1995, the GATT transformed into the WTO and consists of 153 nations. The WTO is not a government, but rather an institution to provide guidance and resolution. Within the WTO, 3 nations are still allowed to set their own levels of environment, labor, health, and safety protections and promote trade in a setting that individual nations are comfortable preforming within. The overall role and purpose of the WTO is to reduce trade barriers. The WTO assesses fines and imposes monetary fines while refraining from placing smaller countries at a disadvantage to settle trade disputes. While the WTO does not develop rules, the WTO does provide protection through trade opportunities. It also fosters transparency in the trading system, and enforces rules not by governing but rater a dispute settlement system (Desierto, 2015). World Trade Relations World trade relations continue to face a variety of challenges and unresolved issues. In 1995, when the GATT was transformed into the WTO, the mechanism’s purpose was to improve the process of resolving trade disputes among its 153 member nations (Carbaugh, 2013). One of the main functions of the GATT turned WTO was to promote freer trade through its role in trade dispute settlement. One of the primary issues with GATT is the lack of availability of a third party to make judgments. If a third party is unavailable, the matter remains open leaving the issue unresolved for years. Another challenge that was recognized with GATT is that stronger and more developed countries generally win the disputes which further suppresses the weaker country (Carbaugh, 2013). To begin to alleviate a few of these issues, the GATT appointed a conciliation panel and implemented formal complaint procedures. Even after implementing the panel and the dispute procedures, the next problem was that the panel had no authority to actually enforce the decisions being made. This problem was corrected later with the shift from GATT to the WTO (Carbaugh, 2013). Other noted issues involved the required use of tariffs over quotas to protect domestic 4 operations. The problem with requiring the use of tariffs and not allowing for formal channels to utilize quotas. At this point in time, the GATT account didn’t take into account the quotas that were implemented as part of voluntary exportrestraint agreements. The agreements were outside of the GATTs jurisdiction (Carbaugh, 2013). So, while the GATT would attempt to mandate one area of trade, there were certainly other ways to work around the trade system. Conflicting Views Another area that needs to be discussed in regards to international trade is the role of agriculture and other subsidies in world trade. There are conflicting views that affect the way that agricultural goods are handled. To understand these viewpoints, we must first understand what subsides are and how they work. Subsidies are grants that are provided by the government to a person, or business to incentivize a certain type of enterprise that is advantageous to the public (Subsidy, 2015). Subsidies are financed by the taxes paid out by the public, unlike tariffs and quotas financed by the country importing the products (Carbaugh, 2013). Tariffs and quotas are placed upon those individuals purchasing the products and can decrease import demand for a product, which will place the burden on the home country to produce the product. Subsidies on the other hand, typically provides the same end result, but the home country pays the price rather than other countries purchasing the products (Carbaugh, 2013). Within the realm of agriculture, each method can control exports. By placing tariffs and quotas on other countries, the other countries are less likely to rely on other countries to provide their food source. This also limits the amount of food sold outside of the home nation. Subsides incentivize farmers to sell domestically, by providing extra income or higher prices to sell the food products domestically (Carbaugh, 2013). 5 Intellectual Property Rights (IPRs) Intellectual property rights (IPRs) are exclusive rights to use an invention, idea, product, or process for a predetermined period of time (Carbaugh, 2013). IPRs are acquired by registering the product through the government. Without acquiring IPRs, an individual or product owner can be faced with theft and reproduction of the idea or product. Examples of IPRs include copyrights, trademarks, and patents (Carbaugh, 2013). Attempting to protect intellectual property in the international community is an exceptionally difficult process. While the United States has a number of processes set in place for protection and has a legal system in placed to enforce IPRs, many other nations struggle to do the same. Another issue arises in the most developed of countries when technology advances surpass the protections that are put in place by the legal system. Unfortunately, the very nature of IPR protection is controversial due to the exceptionally fast pace in which advancements are made and the environments they are being introduced into (Carbaugh, 2013). Some of the major infractions that are recorded have involved pens, batteries, and Gillette razors, but copy machines and Yamaha motorcycles and scooters (Carbaugh, 2013). Replication of the items took place and enforcing laws have been excessively difficult for the protected company. It is reported that five out of six motorcycles and scooters with particular model numbers are copies (Carbaugh, 2013). The consumers purchasing the products may or may not even be aware they are purchasing a counterfeit product. Infringement losses were valued at approximately $48 billion a year as of 2009 (Carbaugh, 2013). The proposed resolution to reducing and eliminating infringements include balancing out the gains of freer trade. In the meantime, governments have attempted to protect workers and 6 businesses that are being been adversely affected by giving trade adjustment assistance to those who incur hardships. This concept allows those incurring hardships to benefit as well as those enjoying significant gains. By spreading the wealth from wealthy to poor countries and allowing more individuals to benefit, at least to a point, the less likelihood that technology and products will be infringed upon (Carbaugh, 2013). In addition, other noted ways to fight back against counterfeiting include: (a) conducting additional research and implementing technologies that will not allow counterfeiters to copy products as quickly, (b) conduct the research not only at the company level but the professional organization and research institution level, (c) enact more effective legislation, (d) implement an effective system of penalties, and (e) conduct awareness campaigns about the potential dangers to consumers which should decrease purchases (Ene & Mihăescu, 2014). Policy Interests Developing and developed nations rely on policies created in the international environment to settle trade issues. The World Trade Organization was implemented to not only provide policy guidance, but enforce them as well (Carbaugh, 2013). Both developing and developed nations have similar interests in achieving fair and equitable transactions while trading with other nations. Weaker countries want to ensure they are given a fair shake as a stronger country would be and not automatically lose the dispute based upon status. One of the thoughts in a global society is that a country’s geography is one of the key factors utilized to explain potential policy interests. Instead of geography being identified as the key factor, the role of economic and political institutions is far more important factor when providing an explanation for trade in a developing nation (Sarwar & Siddiqi, 2014). Developing 7 nations tend to focus upon achieving equal footing in the international environment while developed nations are focused upon acquiring protection from IPR violations (Carbaugh, 2013). In addition, by having set policies managed by a single governing agency that not only provides a given set of rules but also provides a panel to settle any disputes, would help to provide consistently while conducting business. Conclusion To form a further understanding of international trade for developed and developing countries, one can understand why a more formalized system is required to provide governance. Initially the governing entity was identified as an organization defined as GATT, later to be changed into the WTO to provide governance in the trade market and is made up of 153 nations. The WTO plays a significant role in international trade by providing a governing council, guidance, and a mechanism to establish a set of guidelines, trade can be conducted more easily. The week’s assignment provided a deeper understanding of the many aspects of the multilateral trade negotiations, enacting trade consequences and reviewing economic policy. In addition, a further discussion was also provided in regards to agricultural subsidies and International Property Rights. 8 References Carbaugh, R. (2013). International economics. (14th ed.) Florence, KY: Southwestern Desierto, D. D. (2015). Balancing national public policy and free trade. Pace International Law Review, 27(2), 549612 Ene, C., & Mihăescu, G. L. (2014). The fight against consumer goods counterfeiting – dimensions, challenges, solutions. Economic Insights Trends & Challenges, 66(4), 53 67 Ricard, A., Reynaud, E., Gopinath, C., & Ravilochanan, P. (2012). International comparison of global perceptions. International Business Research, 5(7), 2837. doi:10.5539/ ibr.v5n7p28 Sarwar, S., & Siddiqi, M. W. (2014). Institutions or geography: What explains more to trade policy for developing nations? Pakistan Journal of Commerce & Social Sciences, 8(3), 640661 Subsidy. (2015). Retrieved from http://www.merriamwebster.com/dictionary/subsidy
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