The Global Economy

1. What are the principles of the global trade regime? Explain and give your own
example for each principle. ( page 175)
-Trade liberalization
The reduction of barriers between nations can help improve the quality and cost
of goods and services that they exchange. This is done through the removal of
import quotas and tariffs. In addition, the lower taxes on products that are moving
through customs borders can help the countries that are importers lower their
costs.
Example:
If im exporting and importing to the other countries I will just pay a lower taxes
also entrepreneurs and multinational companies will pay only a lower taxes so
they will sell the goods or the products to the consumer in a cheap or lower price.
Another example : by The International Trade Administration (ITA)
The 2010 ASEAN Trade in Goods Agreement (ATIGA) consolidated all Common
Effective Preferential Tariff/ASEAN Free Trade Area (CEPT/AFTA) commitments
related to trade in goods. It seeks to establish a single market and production
base with a free flow of goods in the ASEAN region, a major component of the
ASEAN Economic Community (AEC). ATIGA covers tariff liberalization, trade
facilitation initiatives, simplification of rules of origin, and establishment of an
ASEAN Trade Repository.

-Non discrimination
Non discrimination is “the fundamental cornerstone” of the global trade
organization. The nondiscrimination principle has both 2 dimension (most-
favored-nation treatment) and internal (national treatment) dimensions. The
equivalent treatment of imports from various beginnings guarantees that imports
come from the most reduced cost unfamiliar providers.
Example:
If one countries increase the tariff in the goods or products other countries need
to increase their tariff in the products also

All FDA-regulated products imported into the United States must comply with the
same laws and regulations as domestic products. Imported food must be pure,
wholesome, non-toxic and produced under sanitary conditions. Medicines and
devices must be safe and effective. Cosmetics must be safe for their intended
use and properly labeled.

-Reciprocity
The specifies that a state profiting from another state's exchange concessions
tought to give generally equivalent advantages consequently they will get benefit
to benefit state. nations can help improve the quality and cost of goods and
services that they exchange by Returning the favor.
Example:
The Philippines and Japan entered into a free trade agreement. PJEPA is the
Philippines’ only bilateral free trade agreement, covering, among others, trade in
goods, trade in services, investments, movement of natural persons, intellectual
property, customs procedures, improvement of the business environment, and
government procurement.
The Philippines and EFTA members Iceland, Liechtenstein, Norway, and
Switzerland signed a free trade agreement. The Philippines-EFTA covers trade
in goods, trade in services, investment, competition, intellectual property,
government procurement, and trade and sustainable development. Nations will
get their own benefits and they will become a successful.
-Safeguards
It is a permit a state to temporarily increase protectionism without withdrawing
entirely from a trade agreement clause permitted a state to raise import barriers
in response to “import surges” that caused, or were likely to cause to a domestic
industry and to stop or temporary restriction on importing from a specific
products.
For example:
The washing machine . Some washing machines are front-loading, some are top-
loading. Machines hold different sized loads and use different amounts of water.
Some take longer per load than others. Some are automatic wash and dry, Some
have auto soap dispensers, and some are even “smart” enough to let you tell
Amazon’s Alexa to “start the wash." It's competitive. That’s why President Trump
approved a safeguard on washing machine manufacturers in the U.S. However,
what temporarily helps a producer likely won't help the American consumer.

-Development
“Development principle” began to emerge and several new at GATT provisions
gave LDCs special treatment that diverged from the nondiscrimination and
reciprocity principles. However development remained a subsidiary trade regime
principle because the major trading nations agreed to only limited concessions to
promote LDC interests.

Example:
The united states of the America played an even more influential role in
determining the outcome of the URA and the eventual architecture of the WTO,
which succeeded the GATT system.although it initially had reservations about its
formation as an international organization. It is concluded that although the
incentives for protectionism are strong in the United States and therefore
increase with globalization and the evolution of the international division of
labour, the likelihood of a weakening of the WTO inspired by the United States is
weak The domestic political system of the United States expresses these
 protectionist interests in international trade policy through a series of
administrative and legal remedies underpinned by principles such as reciprocity
and "fair trade". The counter-factors to this are the growing power of US export
interests and the extraordinary power and influence of the United States in the
multilateral regime, in which it is a policy-maker rather than a rule-maker. As
such, the WTO tends to reflect and reinforce the economic interests of the United
States, and the United States as a whole is therefore likely to continue its efforts
to join the multilateral organization and strengthen it in a general, rather than to
break away from it.

2. What do you understand about the Bretton woods system and what was the
cause for its demise? (page 144)

-Bretton Woods was a gold exchange regime in which the main reserves were
gold and the U.S. dollar it requires the currency peg to the us dollar which was
the pegged turn into a piece of gold also it is a expression of currency in terms of
gold or gold value o establish a par value .

The United States was making it more difficult for foreign central banks to change
their dollars into gold. President Richard M. Nixon therefore suspended the
official convertibility of the dollar into gold and imposed a 10-percent tariff
surcharge on all dutiable imports By the early 1970s, the requirements for
adequate reserves liquidity, confidence, and adjustment all presented serious
problems: The U.S. balance-of-payments deficits created a crisis of confidence in
the dollar countries were therefore reluctant to hold large supplies of U.S. dollars
for liquidity purposes and the dollar could not be adequately adjusted through
devaluation. the Bretton Woods regime of pegged exchange rates collapsed and
was replaced by a regime that permitted floating exchange rates.It is the great
depression of the people in 1930’s in world war 2 because of the fear and lack of
 recurrences of lack of cooperation among the nation states political instability and
economic turmoil specially on the world war II

3. What are the functions of IMF,WTO and WorldBank? Give examples on how
these institutions are still relevant today (page 27)

The IMF is to monitor a system of pegged or fixed exchange rates, in which each
currency had an official exchange rate in relation to gold and the U.S. dollar. This
system was designed to avoid the competitive devaluation of currencies that led
to trade wars during the interwar period also the IMF provided short-term loans to
help states deal with temporary balance-of-payments deficits and maintain the
fixed exchange rates of their currencies also it is a foster global monetary
cooperation.
This covid 19 pandemic is a huge impact to the world economy as well as the
global trade as production and consumption skilled back across the globe IMF
has responded to covid 19 crisis through financial assistance to help countries
and protect the most vulnerable and set the stage for the economic recovery.

The WTO deals not only with trade in goods but also with trade in services,
intellectual property rights, and trade-related investment measures also WTO
was designed to be more effective and authoritative than GATT, and in some
respects it has succeeded also it is the only internationally organization that
dealing with the global rules of trade WTO has a one-nation, one-vote system,
the major trading nations, mainly DCs, are instrumental in setting the agenda for
multilateral trade negotiation.
This covid 19 pandemic is a huge impact to the world economy as well as the
global trade as production and consumption skilled back across the globe wto
trade measure to assist admittance to Coronavirus basic clinical labor and
products, through briefly eliminating obligations and duties and charges on
Coronavirus basic clinical merchandise and other fundamental supplies.
 World Bank provided long-term loans for postwar reconstruction in Europe and
economic development in LDCs to avoid the financing problems that developed
after World War I.it is also an internationally recognized and supported that
provides technical and financial assistance in developing countries in the world
and the finance resources of this bank help the poor countries to help their
economic growth. World Bank policy prescriptions are based on macroeconomic
concepts relevant for the economy as a whole rather than individual firms or
households.
This Covid 19 pandemic is a huge impact to the world economy as well as the
global trade as production and consumption skilled back across the globe World
bank provided a Covid 19 financial response in support in government policies
and actions to respond to health crisis, support household and firms,finance the
response and build foundations of an early, sustainable recovery of every
country.

4. What do you understand about the Washington consensus? What are its effects
in the society?
- Washington consensus belief that “the combination of democratic government,
free markets, a dominant private sector and openness to trade is the recipe for
prosperity and growth. Washington consensus emphasized macroeconomic
discipline, a market economy and an openness to the world economy and market
based forms.
It is promote foreign direct investment as result the lower tax rates making the
economy more competitive globally , it is also encompassed a broad
liberalization of the economy and promote liberalization of international trade by
cutting tariffs and eliminating quotas and other non-tariff barriers to trade, and
lastly it easier for capital to flow in and out of the country.