Using a unique, question-based format, Global Trade Policy offers accessible coverage of the key questions in trade and policy; it charts the changing policy landscape and evolving institutional arrangements for trade policies, examines trade theory, and provides students with an economic framework to better understand the current issues in national and international trade policy. Uses a unique, question-based format to explore the questions and current debates in international trade policy and their implications Explores trade theory to help guide discussions of trade policy, including traditional theories of inter-industry trade, as well as newer theories of intra-industry and intra-firm trade Examines the national and international effects of widely used policies designed to directly and indirectly affect trade, and considers the evolving institutional arrangements for these Charts the changing policy landscape from traditional trade policies such as tariffs, quantitative restrictions, and export subsidies to those including intellectual property rights, labor, the environment, and growth and development policies Covers national as well as global perspectives and their interaction, helping to explain opposing views on trade policy and liberalization Includes applied exercises enabling students to explore open-ended and realistic questions of policy debate, making it ideal for classroom use; an instructor's manual will also be available on publication at www.wiley.com/go/globaltradepolicy
Acknowledgments xi List of Tables xv List of Figures xvii Preface xxi Part One Trade Theory as Guidance to Trade Policy 1 1 Preliminaries: Trade Theory 3 1.1 What Are the Core Questions Asked by International Trade Economists? 3 1.2 How Can Trade Theory Provide Guidance to Trade Policy? 4 1.3 How Has International Trade Evolved over Time in Practice? 5 1.4 How Has Trade Theory Evolved over Time? 6 1.5 How Is the Book Organized? 9 Further Reading 11 2 Inter-industry Trade 13 2.1 What Are the Effects of Trade in the Long Run, When Countries Differ in Technologies? 14 2.1.1 What are the production possibilities? 15 2.1.2 What are the relative costs and prices in autarky? 16 2.1.3 What are the world prices with trade and patterns of trade? 17 2.1.4 What are the gains from trade? 20 2.1.5 What are the effects of liberalizing trade policy? 22 2.2 What Are the Effects of Trade in the Long Run, When Countries Differ in Endowments? 24 2.2.1 How are endowments and outputs related? 28 2.2.2 How are goods prices and factor prices related? 29 2.2.3 What are the production possibilities? 32 2.2.4 What are the relative costs and prices in autarky? 32 2.2.5 What are the world prices with trade and the patterns of trade? 33 2.2.6 What are the gains from trade? 35 2.2.7 What are the effects of liberalizing trade policy? 37 2.2.8 How does factor mobility change the trade patterns? 38 2.3 What Are the Effects of Trade in the Short Run, When Countries Differ in Immobile Endowments? 39 2.3.1 What are the production possibilities? 40 2.3.2 What are the relative costs and prices in autarky? 42 2.3.3 What are the world prices with trade? 46 2.3.4 What are the patterns of trade? 47 2.3.5 What are the gains and income distribution effects of trade? 47 2.3.6 What are the effects of liberalizing trade policy? 50 2.4 Summary Remarks 51 Applied Problems 54 Further Reading 55 3 Intra-Industry and Intra-Firm Trade 57 3.1 What Is Intra-Industry Trade and Its Effects? 58 3.1.1 What are the patterns and gains from intra-industry trade? 60 3.2 What Is Intra-Firm Trade and Its Effects? 65 3.2.1 What are the patterns and motives for foreign direct investment? 66 3.2.2 How is trade related to foreign direct investment? 68 3.2.3 What are the patterns and motives for outsourcing and offshoring? 69 3.3 Summary Remarks 71 Applied Problems 74 Further Reading 76 Notes 78 Part Two Trade Policies and Their Effects 81 4 Preliminaries: Trade Policy and Welfare Considerations 83 4.1 What Are Traditional Trade Policies? 83 4.2 What Approaches Are Used to Examine Trade Policy? 84 4.3 What Are the Welfare Effects of Liberalizing Trade Policy? 85 4.4 How Is Part Two Organized? 88 Further Reading 89 Note 90 5 Tariffs 91 5.1 What Are Tariffs, Their Types and Purpose? 91 5.2 What Are the Effects of Tariffs? 92 5.2.1 Case 1: What are the effects of a tariff imposed by a large importer? 95 5.2.2 Case 2: What are the effects of a tariff imposed by a small importer? 100 5.2.3 Case 3: What are the effects of a tariff when export supply is inelastic relative to import demand? 103 5.2.4 How is the burden of the tariff allocated across countries and agents? 106 5.3 What Are the Effects of Tariff Liberalization? 107 5.4 How Protective Are Tariffs of the Domestic Industry? 109 5.4.1 How does tariff escalation affect the protection of the domestic industry? 110 5.5 Summary Remarks 111 Applied Problems 115 Further Reading 116 Notes 117 6 Export Subsidies 119 6.1 What Are Export Subsidies, Their Types and Purpose? 119 6.2 What Are the Effects of Export Subsidies? 120 6.2.1 Case 1: What are the effects of an export subsidy imposed by a large exporter? 122 6.2.2 Case 2: What are the effects of an export subsidy imposed by a small exporter? 127 6.2.3 Case 3: What are the effects of an export subsidy when export supply is elastic relative to import demand? 129 6.2.4 Case 4: What are the effects of an export subsidy imposed