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international trade and access to markets - Coggle Diagram
international trade and access to markets
barriers to trade and protectionism
protectionism - economic policy where in a country limit imports to protect home industries
types of barriers to trade
import license
- licences issued by a government authorising the import of goods from a specific source
import quotas
- set a physical limit on the quantity of goods that can be imported into a country
subsidies
- grant or allowances made to domestic producers in order to reduce their costs and make them more competitive against imported goods
voluntary export constraints
- when the exporting country will limit their exports to deter the importer from imposing trade barriers
embargoes
- partial or complete prohibition of trade with a particular country - often as a result of political rather than commercial conflict
trade restrictions
- restricts imports based on the quality of goods or how they are produced
trends in the volume and pattern of international trade
move towards free trade
the GATT (general agreement on tariffs and trade), later the WTO (world trade organisation), was established in 1947 and works towards gradually lowering barriers to international trade and achieve total free trade
trade tariffs have shrunk to a tenth of their level in 1947
growth of emerging economies
forecasts suggest that the Asia-Pacific region will experience the fastest growth in global trade in the 2020s and onwards
forecasts also suggest that the Machinery and transport sector, which includes consumer electrical products, will make the largest contribution to trade in the next decade - it can be expected China will benefit hugely from this
increase in foreign direct investment
annual FDI adds up to around $1 trillion USD
the top three recipients of FDI globally are USA, China and Belgium
countries which receive significant investment tend to be rich in natural resources, have large consumer markets and/or financial services
fair trade and ethical investment
fair trade
social movement whose goal is to help producers in developing countries achieve better trading conditions and promote sustainability
this is done by advocating for payment of higher prices to producers as well as help to increase social and environmental standards IE: organising producers into co-operatives to give them more negotiating power
focuses mostly on agriculture; coffee, tea, fruit, honey etc
fair trade can be achieved via buyers or 'alternative trading organisations' such as Oxfam who buy directly from buyers and then go straight to market
ethical investment
form of investment where investors will choose to place their capital in socially responsible activities - they may choose to restrain from getting involved in tobacco, big pharma or fossil fuels
trading relationships and patterns
trans-pacific partnership (TPP)
free trade agreement between the USA, Australia, Canada and other countries in Asia and South America
includes some of the most growing economies and regions in the world
the partnership appears to be covering investment, copyright, patents, environmental standards and a whole host of other subjects
transatlantic trade and investment partnership (TTIP)
free trade agreement being negotiated between the EU and the USA
aims to reduce regulatory trade barriers for big business when it comes to issues like food safety and environmental legislation
many opponents to the agreements on the grounds of increasing TNCs' power, reducing democratic power and the protection of public services like the NHS
China
member of the G20 (established in 1999 to give a voice to major developing economies),
member of the 'group of 77 and China' (established in 1964 to represent to interests of the world's poorest economies and encourage development)
investment in Africa
the Chinese government and Chinese TNCs are investing heavily in African countries, many of which aren't invested in or utilised by Western powers
one clear objective of this investment is to extract primary resources including metals to support industrial expansion back in China IE re-opening old copper mines in Zambia and Botswana
there is also intent to start secondary manufacturing in some countries, particularly textiles, as well as buying up land for food production
Latin America
Latin America is another emerging region, and primarily dominated by two major trading blocks
Mercosur
- formed in 1991, made up of Brazil, Argentina, Uruguay, Paraguay and Venezuela
operates very similarly to the EU, often referred to as 'the common market of the South'
offers freedom of movement between member states and trades globally
Pacific Alliance
- formed in 2011, made up of Chile, Peru, Colombia and Mexico
more likely to make bilateral trade agreements with other nations than Mercosur
sees the Asia Pacific and the USA as its main markets, will join TPP
Differential access to markets
special and differential trade (SDT) agreements are made between developed countries and the world's least developed countries (as categorised by the UN general assembly)
aims to tackle issues in developing countries like low income, concentration on primary industry and vulnerability to volatile market
an example of this could be the EU's EBA agreement which agreed to grant access for all products from LDCs, except arms and weapons, on a duty-reduced, quota-free basis
case study : world trade in bananas
exporters of bananas are mostly developing countries in South America and West Africa
importers and consumers of bananas are mostly developing and emerging nations; the USA, China, UK etc
a few TNCs dominate the industry; Dole, Del Monte and Chiquita - working as a middle man between the suppliers and the retailers
due to fair trade movements and the desire to have a more ethical relations with suppliers these companies resigned ownership of plantations in return for guaranteed supply contracts with medium sized suppliers
trade wars 1992-2009
EU countries negotiated a trade agreement with 71 African, Caribbean and pacific countries via the Lome convention 1975
this gave those nations special differential treatment to supply the EU market
there was intent to expand this agreement to include more countries in order to support smaller, family run banana plantations and farms
US TNCs filed a complaint against this agreement to the WTO arguing it was unfair trade as they currently controlled the Latin American suppliers
the WTO ruled against the EU and ordered them to cease the practise
a compromise was reached in the Geneva Banana agreement in 2009 - this was between the EU and 11 Latin American countries
there are still worries that suppliers aren't able to control their own trade