International Trade Lecture #1 PDF

11/23/2024 International Trade Lecture #1 1 Basic Argument Free Trade vs. Protectionism “Do what you do best and trade for the rest!” Free Trade = Specialization 2...

11/23/2024 International Trade Lecture #1 1 Basic Argument Free Trade vs. Protectionism “Do what you do best and trade for the rest!” Free Trade = Specialization 2 1  11/23/2024 Roots of Economic Prosperity Private Property – (And its protection) Rule of Law (?) Political Stability (?) 3 “Little else is required to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes and a tolerable administration of justice.” – Adam Smith 4 2  11/23/2024 Will this happen if we back out of NAFTA? Actually, no, we re-negotiated and made improvements = USMCA 5 Domestic vs. International Trade Logistics Customs / Religions – Holidays – Male/Female Currency Tax Issues Government / Political Communication / Language Work Policies – Age, Hours, Conditions 6 3  11/23/2024 7 Protect and Destroy: The Lesson of Smoot–Hawley 8 4  11/23/2024 9 10 5  11/23/2024 11 What do you see? Nebraska Pioneer Family 1886 12 6  11/23/2024 Barriers to Trade Tariffs – Revenue – Protective Embargo Quota Voluntary Restriction 13 U.S. Balance of Trade (millions) 14 7  11/23/2024 U.S. Balance of Trade 15 U.S. Imports 16 8  11/23/2024 U. S. Imports 17 U.S. Exports 18 9  11/23/2024 U.S. Exports 19 Arguments Against Free Trade Jobs – Need to protect – This is big issue Dumping Military Self-Sufficiency Infant Industry – What?? Licensing / Quality Issues 20 10  11/23/2024 Another “concern” 21 Dumping…. Dumping is a word normally associated with refuse. But dumped goods can be a boon to consumers. Over the past two decades, U.S. producers have filed more than 300 antidumping claims against foreign suppliers. The allegedly offensive products run the gamut from tin cans to toothbrushes, aspirin to alcohol, hammers to honey, pencils to pasta. 22 11  11/23/2024 Products “Dumped”… In the grocery cart Sugar Fresh Atlantic salmon Crawfish tail meat Honey Pasta Nonfrozen apple juice concentrate Frozen concentrated orange juice Canned pineapple Individually quick-frozen red raspberries Preserved mushrooms Fresh tomatoes Fresh garlic In-shell pistachios Aspirin Petroleum wax candles Natural-bristle paint brushes 23 Store construction Softwood lumber Gray portland cement Furfuryl alcohol (paint) Granular polytetrafluoroethylene resin (electrical wire insulation) Carbon steel wire rods I know… it’s a long list!!! Stainless steel bars Steel concrete reinforcing bars Structural steel beams Welded carbon steel pipe Malleable cast-iron pipe fittings Seamless pipe Silicon metal Iron construction castings Pressure-sensitive plastic tape (aisle marking and labels) Car Replacement glass windshield Brake rotors Foundry coke (used in the production of engine blocks) Polychloroprene rubber (belts and hoses) 24 12  11/23/2024 General Topics… What do countries export? – Various goods – Services What does immigration really mean? – Export of Workers from country of origination – Graphically? Mexican Trucking Issue – Part of NAFTA – What does it mean? – Why not replace all jobs? 25 Fruits We Import Apples New Zealand Apricots China Bananas Ecuador Blackberries Canada Blueberries Chile Coconuts Philippines Grapefruit Bahamas Grapes Peru Kiwifruit Italy Lemons Argentina Limes El Salvador Oranges Australia Pears South Korea Pineapples Costa Rica Plums Guatemala Raspberries Mexico Strawberries Poland Tangerines South Africa Watermelons Honduras 26 13  11/23/2024 Remittances $$ Returned to “Home” country For example --- Mexico – $$ returned to Mexico by workers in U.S. Simplified in 2001 – Bush / Fox agreement – US Simplified Banking Rules – 2022 - $58.4 Billion – 2021 - $51.6 Billion – 2020 - $40 Billion – Largest generator of foreign currency for Mexico No longer 2nd (Oil Exports declined) 27 https://www.wilsoncenter.org/article/infographic-remittances-mexico-reach-historic-high 28 14  11/23/2024 29 Recent Report (8/18/23)… https://www.reuters.com/investigates/special-report/mexico-drugs-remittances/ 30 15  11/23/2024 31 What’s a foreign car? Somewhat blurry? 3 Issues 1. Where is it built? 2. Where do the parts come from? 3. Where do the profits go? 32 16