Free trade denotes a state of international commercial relations premised on governments' restraint from using policy instruments meant to favor indigenous industries against foreign competitors. According to the conventional trade theory advocated by classical and neo-classical thinkers, free trade makes little economic sense failing nations' tendency to specialize based on comparative advantage, a concept with high persuasive influence despite the elapsing of time. Even though the comparative advantage rule has seldom been questioned per se, the free trade concept has been fiercely disputed and not infrequently, bashed. Nations' involvement in international trade often follows patterns that do not fit theoretical models but attempt to respond to circumstantial interests, most often the need to protect poorly competitive industries. In common parlance, free trade has had both proponents and enemies.
The term "globalization" designates the rapidly advancing international economic integration through substantial growth in trade of goods and services as well as surging cross-border factor mobility from the early 1990s onwards.This acceleration in the liberalization of world trade and capital movements is largely attributable to technological progress which significantly curtailed the expenses for transport as well as communication. In conjunction with the progressing opening of major newly industrializing economies endowed with abundant and cheap labor forces, it has reinforced a geographical fragmentation of production processes according to cost considerations. This phenomenon termed as "vertical specialization", "outsourcing" or also "slicing the value chain" in turn has translated into a hike in FDI and international trade of intermediate products. The main objective of this paper is to identify adequate trade models for assessing the corresponding effects of those developments. In this context, textbook trade theories spanning from comparative advantage à la Ricardo to the new-new trade theory are examined. Subsequently, we expand on globalization-induced new forms of trade (intra-firm trade, trade within the value chain) and finally conclude with our findings to properly account for those trends.
In view of the already relatively low most-favored-nation (MFN) rates on average, today's most impeding barriers to transatlantic trade are not custom tariffs but so-called behind-the-border measures. TTIP was originally destined to become a verily comprehensive trade and investment agreement in acknowledgment of this circumstance. But its distinctively ambitious agenda exposed both camps' opposing positions on several fronts at the same time.Considering that the negotiations had already hit several road blocks under the espousing Obama administration, the protectionist convictions and "America First" policy of the incumbent US President promised to complicate many of these contentious issues. Cherished as a popular tool in the business environment, the SWOT analysis also stood the test in the innovative context of identifying internal strengths and weaknesses of TTIP as well as external opportunities and threats to its conclusion further down the line. Juxtaposing its intrinsic strengths and weaknesses of TTIP unveils a mixed picture, alike so often in real life where no absolute truth exists. Nevertheless, the research demonstrates that there are compelling economic incentives for revitalizing the bilateral talks with respect to the likely transformations it would bring about in terms of market organization and functioning, production and distribution efficiency, national income, consumer satisfaction and, not least, regulation harmonization. Examining the matter from a different angle by asking "What are the probable implications of the scenario where the negotiations on a transatlantic trade and investment agreement will not be reinstated in the near future?" provided further illuminating insights. This approach revealed that neither the EU nor the US can actually afford to perpetuate the current status quo. Without TTIP, the relative size of the transatlantic pole is bound to dwindle in the global economy. Let alone the long-term geostrategic damage caused by its absence, as the EU and the US would miss out on the last chance to impose their joint vision of 21st century commerce on the rest of the world and preempt China from doing so instead. A glance at the corresponding external opportunities and threats suggests that the pendula could swing in either direction in terms of the TTIP's destiny. The author believes that Brussels will be hesitant to re-embark on delicate trade negotiations until the next US presidential election, in the hope that a more amicable and more reliable counterpart would enter the White House. The Commission will be too distracted anyway by the coinciding Brexit from taking the initiative any time soon. The UK's exit represents a double-edged sword in this context, as the dueling race for a Free Trade Agreement (FTA) with the US will immediately start once this all-consuming affair is settled and tied up capacities are recuperated. But for also reaching the finishing line-synonymous for the successful ratification of TTIP-it is imperative to learn from the mistakes of the past.Aloof...
While the EU officials touted multilateralism under the WTO's patronage as the silver bullet towards trade liberalization 20 years ago, the 2006 Communication "Global Europe -Competing in the world" ushered in a shift in trade policy. It notably acknowledges that preferential trade agreements (PTAs) enable to go further and faster in promoting openness and deep integration. This sudden turnaround was ultimately consolidated through the 2015 release of the "Trade for all" whose primary motives were to adjust for the rise of global value chains and to respond to the fierce criticism on the Commission's non-transparent handling of commercial policy. By addressing WTO-X and WTO+ policy provisions in tandem with traditional tariff removal, Europe's PTAs aim at delivering reciprocal and effective opening guided by a high level of ambition. A paramount objective in this context is evidently improved access to vast international markets and fast growing regions in order to bolster the competitiveness of European enterprises, exemplified by landmark undertakings with North-American allies and initiatives in the burgeoning Asia-Pacific region. Also when consolidation bonds with Africa, Turkey, Russia as well as Latin America and the Caribbean, it transpires that the Commission takes -besides this orientation on primarily economic criteria -its partners' readiness and broader political conditions into account as well. Facing the prospect of an impending failure of the Doha Round, it appears that Brussels endeavors to prophylactically install its own safety net
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