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Trade theory - Coggle Diagram
Trade theory
Who produces which goods and why?
Ppl coordinate production activities to sell to consumers what they want
Ppl act in their own self-interest
-> Invisible hand
Production possibility
One way to understand the invisible hand
Production possibilities frontier (PPF): đường giới hạn sản xuất
Absolute and comparative advantage
PPF illustrates the key trade-offs faced by one economy
Reciprocal Trade agreement act
general reductions
Most favoured nation (MFN) clause: agreement between two nations to apply tarrifs to each other at rates as low as those applied to any other nation having MFN status
tariff reductions being made on a nondiscriminatory basis
1998, US replaced MFN with normal trade relations
general agreement on tariffs and trade
WTO
main provisions of GATT: trade without discrimination, promote free trade, binding and transparency, multi trade negotiation
WTO reduce national sovereignty?
Yes, because WTO disputes settlement
No, because findings of a WTO dispute settlement panel cannot force the US to change its laws
Retaliatory tariffs for WTO enforcement?
Small country impose retaliatory tariffs
Trade liberalization - harm the environment?
"Race to the bottom" in environmental standards
Social preferences
Trade liberalization: enhance productivity and growth, put downward pressure on inflation, create jobs
Trade liberalization - improve the environment?
Trade stimulates economic growth: key factors in societies' demand for
giàu lên -> tăng nhu cầu về chất lượng môi trường, mức sống
Safe guard
Countervailing duties (thuế chống trợ cấp): export subsidies (trợ cấp thuế xuất khẩu) -> unfair competition
importing countries
Antidumping duties: protection against foreign dumping (bán phá giá)
antidumping investigation:
evidence of dumping,
evidence of material injury,
a link between the dumped imports and the alleged injury
antidumping duty:
equal to margin of dumping = normal price - export price
increase the price of imported goods
decrease consumer welfare
Why trade?