1. NAME WASIM SAJJAD ROLL NO 17 BS-ECONOMICS SEMESTER SIX(VI) 2. PRESENTATION :INTERNATIONAL TRADE POLICY TOPIC:HISTORY OF TRADE POLICY Every Law or Theory survive till the death of his Assumption . (WASI) 3. Every Law or Theory survive till the death of his Assumption . (WASI) 4. Ideas about History of trade polices History of trade policy 1) Tariff for revenue 2 ) mercontilism 3) comperative advantage 4) Britain: repeal of the Corn Laws (1846), turn to free trade 5) US: Hamilton and manufacturing/ the Republican tariff 6) The interwar trade collapse 7) Post WWII: the GATT and gradual liberalization 8) European integration 9) De-colonization and import-substituting industrialization 10) The Washington Consensus 11) strategic trade policy 5. Tariff for revenue WHAT This idea of trade policy was focuse on to get maximum benefit from trade is to charge the tariff on trade for revenue. In this idea a nation charge imports and export tariff for the revenue of the govt. This was the first idea on trade policy that every nation adopted as considring the best policy for trade 6. WHEN This idea of trade policy is still Applied to get benefit and to collect the revenue for the govt. tariff was collected by : USA in 1789 by Act Britain started it about mid of 18th centure Now a days is often used by underdeveloped contries Tariff for revenue 7. WHY This Ides considerd best on for following functions: 1) Revenue genrater 2)protection for industry 3)Consumer walfare/need with redistribution Tariff for revenue 8. Case-History USA imposed the tariff and got a good revenue from this idea. 1792 $4.4million 1850 $39.7million 1900 $233.2million 1950 $407 million 2000 $19914million 2010 $25298million But the new ideas are taking its site. Tariff for revenue 9. What It was believed that national strength could be maximized by limiting imports via tariffs and maximizing exports. Corporations, politicians, and unions demand control over imports through higher-duties to protect local jobs and industries, they are resorting to mercantilism one nation's gain was another's loss. Mercantilism 10. When Gerard de Malynes (1586-1641) Sir Thomas Mun (1571-1641) John Maynard Keynes (1883-1946) the view is still surviving Mercantilism 11. Every nation protect his industry to export more . Mostly imposed tariff on imports . Every nation want to increase forign reserves by considring it a wealth . Mercantilism 12. WHAT This Concept in establishing trade policy is that a country should specialize in producing and exporting only those goods and services which it can produce more efficiently (at lower opportunity cost) than other goods and services (which it should import). Comparative advantage 13. When this idea was emerged in trade policy in 1817 by the Devid Ricardo in his book *Principle of political economy*. Comparative advantage 14. Case history In 1995, US and UK trade with each other .the trade cause the gain of both patner becaue the used to export the good in which there opertunity cost is lower . Comparative advantage 15. What Free trade is a policy in international markets in which governments do not restrict imports or exports. Free trade 16. When . Britain: repeal of the Corn Laws (1846), turn to free trade Still WTO and other organizations are working for free trade Free trade 17. WHY When there were shortage of corn and tariff also causes to inflence the price rise it turn the tariff off and particpate for free trade. Free trade 18. What The Republican Party dominated American politics during the 1920s, with a firm grip on Congress and the presidency The Republicans attempted to promote economic growth with lower taxes and higher tariffs They gave U.S. manufacturing companies trading advantages over foreign companies. Republican tariff 19. When 1923 to 1929 Republican tariff 20. Why The prosperity of the 1920s was caused in part by the adoption of new technologies and improved mass-production methods. The Republicans attempted to promote economic growth with lower taxes and higher tariffs. Republican tariff 21. What A tariff so high that it makes an import prohibitivelyexpensive. A prohibitive tariff discourages imp ortersfrom bringing goods into the country in the first placebecause they will be difficult to sell. when by the USA rpublician party 1929-32 Prohabitation 22. What In the period of crash of trade a higher order tariff was imposed to protect the economies. BY the USA and other leading economies . Interwar collaps policy 23. What The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." Gatt and Librilization 24. When and why GATT was signed by 23 nations in Geneva on October 30, 1947 and took effect on January 1, 1948. It lasted until the signature by 123 nations in Marrakesh on April 14, 1994 of the Uruguay Round Agreements, which established the World Trade Organization (WTO) on January 1, 1995. Trade Liberalization' The removal or reduction of restrictions or barriers on the free exchange of goods between nations. This includes the removal or reduction of both tariff (duties and surcharges) and non-tariff obstacles (like licensing rules, quotas and other requirements). Gatt-WTO and Librilization 25. What The Washington Consensus refers to a set of broadly free market economic ideas, supported by prominent economists and international organizations, such as the IMF, the World Bank, the EU and the US. Essentially, the Washington consensus advocates, free trade, floating exchange rates, free markets and macroeconomic stability. The term Washington Consensus was coined in 1989 by English economist John Williamson to refer to a set of 10 relatively specific economic policy prescriptions that he considered constituted the "standard" reform package promoted for crisis- wracked developing countries by Washington, D.C.based institutions such as the International Monetary Fund(IMF), World Bank, and the US Treasury Department.[ The Washington Consensus 26. Low government borrowing. Avoidance of large fiscal deficits relative to GDP ;Redirection of public spending from toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment ;Tax reform, broadening the tax base and adopting moderate marginal tax rates ;Interest rates that are market determined and positive (but moderate) in real terms;Competitive exchange rates ;Trade liberalization liberalization of inward foreign direct investment; Privatization of state enterprises ;Deregulation: abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudential oversight of financial institutions;Legal security for property rights. The Washington Consensus 27. What Strategic trade policy refers to trade policy that affects the outcome of strategic interactions between firms in an actual or potential international oligopoly. A main idea is that trade policies can raise domestic welfare by shifting profits from foreign to domestic firms this term is recently introduced in the policy in which a nation can make comparative advantage with other nation b imposing temporary tariff or other trade agreement Strategic trade policy 28. Strategic trade policy 29. Figure 1 shows the profits of each firm depending on whether or not each firm enters. The game tree on the left illustrates profits if there is no intervention or free trade, while the game tree on the right illustrates profits if Europe commits to pay a subsidy of 6 to Airbus in the event that it enters. The box diagrams show Boeings profit as the first number in each cell, while the second number is the profit of Airbus Strategic trade policy