Chapter 9 Non-tariff barriers and WTO

Link to syllabus

Figure 9.1 p. 166. Major Types of NTBs

Figure 9.2 page 174Effects of an import quota

Figure 8.4 page 152 (repeated) The net national loss from a tariff

Extension on Monopolies and Protectionism, pp. 176-77

Quota price P2 is higher than tariff price P1, so monopolies prefer quotas.Higher gains for producers, higher losses for consumers.

Tariff for a domestic monopolyQuota for a domestic monopoly

Figure 9.3 Page 180Effects of an import quota, competition, large country

Net gain is e – (b+d), and can be positive. .. “Optimal Quota”

Compare to Figure 8.5 page 160 A large country imposes a small tariff

Net gain is e – (b+d)

End of Multi-Fiber Agreement

Date of NYT article was probably 2004.

China's Experience Under the Multifiber Arrangement (MFA) and the Agreement on Textiles and Clothing (ATC)

This paper analyzes China's experience under U.S. apparel and textile quotas. It makes use of a unique new database that tracks U.S. trading partners' performance under the quota regimes established by the global Multifiber Arrangement (1974 to 1995) and subsequent Agreement on Textiles and Clothing (1995 to 2005).

We find that China was relatively more constrained under these regimes than other countries and that, as quotas were lifted, China's exports grew disproportionately. When the ATC finally ended in 2005, China's exports surged while those from nearly all other regions fell.

Irene Brambilla, Amit Khandelwal, Peter SchottNBER Working Paper No. 13346 Issued in August 2007

How big are costs of protection? (page 188)

(Cost goes up as tariff-squared)

Cost of protection will not be large if tariffs themselves are small, as in U.S. today

WTO protest picture

Source: earlier edition of Pugel

WTO

• Oversees the global rules for government policies toward international trade. More than 140 member countries.

• The WTO was established in 1995, by renaming and upgrading the General Agreement on Tariffs and Trade which was established as an “interim” agreement, 1947.

• Principles:a. Liberalization of trade restrictions, move toward free tradeb. Nondiscrimination among countries, often called the most

favored nation (MFN) principlec. No unfair encouragement for exports

Note that in principle this does not include policy toward FDI, nor should it be involved in international politics. Practice is different.

Link to the WTO

Roberto Azevedo, WTO Director General since Sept. 2013

Born in Salvador, Brazil in 1957

Undergraduate degree from BrasiliaIn Electrical Engineering.Served in various diplomatic postings,most recently as Brazil’s rep to the WTO.

It is said that his major competitor for the WTO position was Herminio Blanco, of Mexico.

Pascal Lamy, Director of the WTO

Bio on Pascal Lamy

Educated in Paris, was advisor to Jacques DelorsHas been active in the French Socialist Party.

Was Commissioner for Trade for the EC 1999-2004.

Continues to hold perhaps honorary positions atFrench universities.

USTR-Zoellick- Former USTR. Previous head of the World Bank.

Link to Robert Zoellick’s page (not working)

Has been criticized by some neo-cons.

Raised in Naperville, Illinois, Mr. Zoellick received a J.D. magna cum laude from the Harvard Law School and a Master of Public Policy degree from Harvard University's Kennedy School of Government in 1981. He graduated Phi Beta Kappa from Swarthmore College in 1975.

Currently working for Romney, and is mentioned for Sec. of State.

Link to Current USTR Michael Froman

Born in California in 1962. A.B. in Public Policy from Princeton, a doctorate in International Relations from Oxford, and a law degree fromHarvard Law (where he met Barack Obama).

Froman was President Obama’s White House assistant and DeputyNational Security Advisor for International Economic Affairs, withResponsibility for trade and finance, energy and development.

Previously, he worked for Citigroup, and was a Fellow at the Councilof Foreign Relations.

Recent USTR—Rob Portman

Link to Rob Portman’s page at OMB

Ambassador Rob Portman was appointed United States Trade Representative by President George W. Bush on April 29, 2005 and was sworn into office on May 17, 2005 by Andrew H. Card, Jr, Chief of Staff to President Bush. Previously he served as a Representative of the Second District of Ohio in the United States Congress. During his time in Congress, Portman served as the Chairman of the House Republican Leadership and was the liaison between the House Leadership and the White House. Was transferred to OMB in April, 2006.

Figure 9.4 page 189 – taken out of 15th ed.! Losses and gains from U.S. protection