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Learning Objectives :
‡ Understand the influence of trade on selected historical
developments
‡ Understand the role of transnational institutions affecting trade
‡ Understand the current U.S international trade position
‡ Impacts of trade and investment on the United States
‡ Understand the drivers of Globalization
‡ Policy response to trade problems
‡ Strategic perspective of U.S trade policy
  
 
  

   


‡ Ancient traders
‡ Rome and the Pax Romana
‡ European Feudalism in the middle ages
‡ The Smoot-Hawley Act in the 1930¶s
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‡ The Soviet Union and the Eastern Bloc
‡ Encourage strong linkages between member countries
and discourage trade with the West.
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‡ The U.S and the western world
‡ Encourage world trade for worldwide prosperity
  





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International Trade Organization (ITO): 1948
General agreement on tariffs and trade (GATT): 1947
World Trade Organization (WTO): 1995
International Monetary Fund (IMF): 1944
World Bank (WB): 1944
General Agreement on Trade in Services (GATS): 1945
Most-Favored Nation (MFN) Clause
³ « Each member country of the GATT must grant
every member country the most favorable treatment it
accords to any other country with respect to imports
and exports´
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‡ Common customer needs. Convergence (Ted Levitt)
‡ Global customers and channels
‡ Transferable marketing experience (learning)

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‡ Economies of scale
‡ Steep experience curve
‡ Global sourcing efficiencies
‡ Favorable logistics
‡ Significant differences in labor costs between countries
‡ Changing technologies and shortening product life cycles
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‡ Global competition. Same competitors in major markets.
‡ Interdependent Countries
‡ Very positive trends in trade (exports & imports)
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‡ Liberalization of trade policies
‡ Compatible technical standards (ISO 9000)
‡ Deregulation of industries
‡ Privatization (State-owned enterprises being privatized)

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‡ Internet technology and its impact on distribution
‡ Information technology and informed/knowledgeable customer
‡ Telecommunications technology and convergence of consumer
tastes
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‡ The European Coal and Steel Community

‡ European Union
‡ North American Free Trade Area (NAFTA)
‡ Mercosur in Latin America
‡ Gulf Cooperation Council (GCC)
‡ ASEAN (Association of Southeast Asian Nation)
‡ APEC (Asia Pacific Economic Cooperation)
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‡ Merchandise exports as a percentage of GNP ranged from

7.7% in 1982 to 5.3% in 1986 to 8.1% in 1995

‡ U.S share of world trade declined from 25% in 10950 to

about 12.7% in 1998
‡ USA is less dependent on exports than other industrial
nations.
‡ On a per capita basis U.S exports about $3550 worth of
goods and imports $4550 worth of goods creating about
$1000 trade deficit on a per capital basis.
‡ Inspite of over 7 million business in the U.S only
210,000 are engaged in exporting.
- Large 1500 MNCs account for more than 80% of U.S
Trade
- U.S Domestic market negatively impacts U.S exports
 
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Restrictions of imports
- Tariff Barriers
- Non tariff barriers

Restrictions of exports
- National security
- Foreign policy
- Short supply products

Export promotion efforts
- Need to earn foreign currency
- Encourage domestic employment
- Increase domestic economic activity

Export promotion staffing in the U.S is lowest among

industrialized nations on GDP basis.

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‡ Locus of control of U.S Trade policy
- Department of Commerce (DOC)
- Department of Defense (DOD)
- Department of Agriculture
- State Department
‡ Trade Policy Approach
- Bilateral approach
- Multilateral approach
- Sectoral Focus
- Sectoral Negotiation
‡ Foreign Direct Investment (FDI) in the U.S
‡ U.S investments abroad