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
Lecture 10: Trade and Development
Benjamin Graham
Housekeeping
• Homework 2 is due now
• Midterm is next Thursday (October 5)
• Midterm study guide is posted
Lecture 10: Trade and Development
Benjamin Graham
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
Lecture 6: Barriers to Trade
Benjamin Graham
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)
Lecture 7: Domestic Politics of Trade
Benjamin Graham
How Dumping Works
Lecture 7: Domestic Politics of Trade
Benjamin Graham
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
Lecture 6: Barriers to Trade
Benjamin Graham
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
Lecture 7: Domestic Politics of Trade
Benjamin Graham
Global Opinion on Trade
•
“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
Lecture 7: Domestic Politics of Trade
Benjamin Graham
Global Opinion on Trade
•
“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?
Lecture 7: Domestic Politics of Trade
Benjamin Graham
The Great Depression vs. the Great Recession
•
•
The great depression caused (and was made worse by) a tariff war.
•
Why the difference?
During the global financial crisis, trade barriers increased slightly, but
not much.
Lecture 7: Domestic Politics of Trade
Benjamin Graham
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 7: Domestic Politics of Trade
Benjamin Graham