国际经济学英文课件lecture06-part2week12th

1、1Lecture 6, Part IICH 9. PREFERENTIAL TRADE ARRANGEMENTS2Regional Trade ArrangementsFree Trade Area (FTA): Eliminate internal trade barriers but maintain existing barriers to nonmembers NAFTA, LAFTA, EFTA Customs Union (CU):Eliminate internal trade barriers and erect common barriers to nonmembersEur

2、opean Community (European Union now) and Mercosur (the Southern Cone Common Market).3Trade Creation & Trade DiversionInitial situation in Country A:A levies100 % tariff on imports from B and C. Products from B and C are $2.00 and $1.50.A imports from C of EF. As consumers pay $3. As govt collects $1

3、.50 for each unit of imports.A forms an FTA with B and eliminates the tariff. The consumer price declines to $2. Imports increase to GH, all from B.4Trade creation: As domestic price declines, consumption increases and production declines. Imports increase by GE and FH.Trade diversion: A now imports

4、 from B. The source of imports diverts from C (the worlds lowest-cost producer) to B (the lowest-cost member producer). As a result, A pays more for its imports.5Figure 9.01 Regional trade liberalization6Welfare AnalysisConsumers gain from a lower price+ (a+b+c+d)Producers lose due to a lower price-

5、 aGovernment loses tariff revenue(_)Net gain( )Gains from trade creation:Losses from trade diversion:7Regionalism vs. MultilateralismWhy are regional trade blocs getting more popular? Willing to trade with countries sharing similar culture, geographical proximity, etc.Disillusioned by the slow pace

6、and inability of GATT in dealing with trade disputes8Problems with RegionalismDiscrimination against nonmembersCause trade diversionSome Justifications for RegionalismComplementary to the process of multilateral liberalization under GATT, thus not inconsistent with GATT: the current official positio

7、n of the USMost trade blocs are natural. Trade diversion is small and the benefit of trade creation is much greater. (Krugman)9NAFTAThe United States, Canada, MexicoEffective January 1, 199415-year phase-in period and virtual free trade by 2008MexicoPreviously pursued import substitution, high tarif

8、f wall, inefficiencyHigh budget deficits, inflationOvervalued currencyPeriodic balance of payments crisesDiscovery of oil, boom, heavy spending and international borrowingDebt crisis in the 1980sEconomic Reform (De la Madrid)Reduce tariffs, nontariff barriersDeregulate businessesPrivatize government

9、 enterprisesCut government spending10Why was NAFTA so contentious?1. Job IssueMexican wage: 10% of the US levelNAFTA would mean a huge job loss for the US?2. EnvironmentApply the Heckscher-Ohlin model to discuss the NAFTA issue in the US?LosersWinnersOverall EffectsThe relative size of the two economies matters. The initial condition matters too. What do they im