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Uruguay Round

8th round of GATT negotiations.
Until now GATT rules were applied only to manufactured goods and commodities. Uruguay Round sought to:
- cover trade in services (fair trade and market rules extension),
- set up rules governing the protection of intellectual property (patents, copyrights, etc), read more about TRIPS here
- reduce agricultural subsidies,
- to strengthen monitoring and enforcement mechanisms.

Implications.
In 1992 services accounted for $900billion out of a total $3580billion in world trade. GATT presence strengthened services as a major source of trade.
Intellectual property protection allows—for example—high-technology companies to function in countries where internal intellectual property rules have been historically weak. It creates an enforcement mechanism.

WTO

WTO is set up to enforce the Uruguay Round agreement and beyond. Read the Agreement Establishing the WTO. Find out about the Uruguay Round Agreements.
An umbrella organisation, encompassing GATT and 2 bodies on intellectual property and services.
Takes over responsibility for:
- arbitrating trade disputes,
- monitoring trade policies of member countries.

Dispute settlements:
Countries no longer able to block adoption of arbitration reports.
Arbitration reports on disputes between member countries will be adopted by WTO unless there is consensus agreement to reject them.
Countries found by arbitration panel to have violated GATT rules may appeal to a permanent appellate body but its verdict is binding.
If offenders fail to comply with the recommendations of the arbitration panel, trading partners will have the right to compensation or (as last resort) to impose trade sanctions.
Every stage is subject to strict time limits.

Visit the WTO dispute index

Future of free trade?

Upcoming issues:
Environment. Interaction of environmental and trade policies. Issue: How best to promote sustainable development without resorting to protectionism.
Workers’ rights. Free trade helps firms to shift production to countries where worker rights are violated. International standards??
Foreign Direct Investment...Many countries still limit investment by foreign companies.
Read all about FDI.

International Monetary System

The Gold standard

Originates from the use of gold coins as a medium of exchange, unit of account and store of value.
Until the Industrial Revolution, when small amounts of goods travelled the world, gold was moved around as payment.

By 1880 most industrial nations have adopted the practice of PEGGING the currency to gold and GUARANTEEING convertibility.

Gold standard: given a common gold standard, the value of any currency in units of any other currency [the exchange rate] was easy to determine.

1 US dollar was defined as equivalent to 23.22 grains of “fine” [pure] gold.
There are 48 grains in an ounce.
As a result, 1 ounce = $ 20.67.
Amount of money needed to PURCHASE an ounce of gold = GOLD PAR VALUE.

1 GB pound was defined as equivalent to 113 grains.



The system assured balance-of-payments equilibrium.
2 countries: Japan & US.
Japan exports more [a trade surplus].
Japanese exporters are paid in US $.
Japanese bank submits $ to US bank and demands gold.

There is a flow of gold from US to Japan.
Flow reduces amount of money supply in US and swells Japan’s money supply.
-->Money supply growth = price inflation.
Japan’s prices go up.
US prices go down.
Japan’s goods are more expensive, so they buy US goods.
At some point balance-of-payments equilibrium is reached.

Collapse??
World War I. Countries printed money to pay for war.
Money = inflation.
Inflation = changing values against gold.
Changing values = loss of trust in government.
Loss of trust = demanding to be actually GIVEN the gold.
Result: governments were afraid of gold stock depletion and suspended the system.

Visit the World Gold Council for info about Gold.


Date: 2015-01-29; view: 752


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