lecture 9: politics of trade - current debates benjamin graham lecture 10: trade and development...

Lecture 9: Politics of Trade - Current Debates

Benjamin Graham

Lecture 10: Trade and Development Benjamin Graham

Today’s Plan

• Housekeeping• Reading quiz• Tariffs vs. Quotas vs. Subsidies vs. Dumping• Understanding public opinion• Group exercise


Housekeeping

• Homework 2 is due now• Midterm is next Thursday (October 5)• Midterm study guide is posted


Question 1

Let's assume Canada's government subsides its timber industry which results in wood "dumping" in the US market. Is the U.S. furniture-building industry is affected by this and if yes, how?A. The furniture industry is an upstream industry in this case because it has to compete

with the cheap prices in the US market from the Canadian wood industry now.B. The furniture industry is a downstream industry in this case and profits from cheap

Canadian wood to use for its furniture.C. The furniture industry is neither upstream nor downstream, it's not affected by the

dumping of Canadian wood.D. Both: The furniture industry has to compete with low Canadian wood prices in the US

market but also benefits from those when building their furniture.

IR 213: Introduction Benjamin Graham

Reading Quiz (2)

• According to economists, antidumping duties......– A. Protect consumers– B. Protect domestic producers– C. Are generally small– D. A and C– E. A and B

Lecture 6: Barriers to Trade Benjamin Graham

Reading Quiz (3)

• The book's presentation of the trade promotion authority (fast track authority) indicates that the legislation:–A) Is a WTO policy intended to spur action in international leaders'

decision by giving them a period of no more than 60 days to respond to trade proposals.–B) Is a branch of the WTO known as "The Highest Arbitrator," which

reviews controversial trade agreements and promptly (in a period of 30 days or less) dispenses judgement over their merits and sections in need of editing.–C) Is a United States policy that circumvents the arduousness of

congressional amending when trade is concerned.–D). Is a United States policy that takes trade policy authority away from

the president and gives it to congress


The Midterm Exam

• Key Terms, Short Answer, Mini-Essay

• Key terms:

– Definition: 1 sentence.

– Relevance: 1-3 sentences

– Example: 1-3 sentences

• Short Answer: 1 sentence is all it takes, sometimes just 1 word.

• Mini-Essay: 3-6 Sentences.

– There will be multiple points we’re looking for

Lecture 11: Midterm Review Benjamin Graham

How Tariffs and Quotas Work (review)

Lecture 7: Domestic Politics of Trade Benjamin Graham

How Subsidies work (review)


How Dumping Works


Checking Understanding

• If Chinese producers dump cheap car axels into the U.S. market, which groups are harmed?– A. U.S. axel makers– B. U.S. car makers– C. U.S. car buyers (consumers)– D. U.S. taxpayers– E. C & D– F. A & B


Global Opinion on Trade

• According to a report from the Pew Research Center, 66% of people in developing countries say increased trade leads to local job creation and 55% say it increases their wages. Only 20% of Americans say trade creates more jobs at home, and 17% say it leads to bigger paychecks. What could explain this?

– A. Poor people are more optimistic responding to surveys

– B. Governments in developing countries mislead the public

– C. Trade has different effects on employment in poor countries and rich countries



• “Similarly, most people in Uganda (79%), Bangladesh (78%) and Lebanon (77%) say trade increases their wages. Even people in some larger economies such as China (61%) see global trade as a way to increase wages.” Why do I consider the phrase “even people in some larger economies…” to be poor journalism?

– A. The size of the economy isn’t what’s relevant here

– B. China has a large population but is not a large economy

– C. China shouldn’t be used as a proxy for all large, developing economies



• “The poll found that most people around the world (81%) agree when asked if growing trade and business ties with other countries is good for their nation. Even 68% of Americans support that general idea.” Is it consistent for Americans to believe that trade costs jobs but is good for their nation?

– A. Yes

– B. No

• Why?


The Great Depression vs. the Great Recession

• The great depression caused (and was made worse by) a tariff war.

• During the global financial crisis, trade barriers increased slightly, but not much.

• Why the difference?


Some big think

• In groups, please write down at least one benefit and at least one cost of each of the following strategies. In each case, identify who is harmed (for the cost) and who is benefitted (for the benefit)

• Total trade openness

• Subsidizing/protecting key industries

• Big government safety net


lecture 9: politics of trade - current debates benjamin graham lecture 10: trade and development...

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