Trade And Globalization.ppt - City University Of New York

4/13/2011How Is Trade Related toPolitical Geography? Can promote stability and peaceCan promote destabilization and warMay provide political leverageA force for globalizationCh llChallengessovereigntyi t andd boundariesbd iMay perpetuate colonial trade relationships orpromote new blocs and cartels Promotion of “Innocent passage” May affect passage and enforcement of laws relatingto product safety, consumer protection,environmental quality and conservationGlobal Arms Sales, 2010Geographic Trend in Sales1

4/13/2011General Dynamics/Lockheed-Martin F-164,450 F-16s had been delivered to the airforces of 25 countries as of July,2010First flown February 197418 sold to Iraq (9/10) for 4.2B (incl. parts/service)Global oil reservesSources of Energy in the U.S. Over TimeGlobal oil tradeAs the geography ofresources changes over time,so does the political power ofcountries and regions thatpossess them.2

4/13/2011Global map of Piracy, 2008NigeriaNigerian ethnic groups and oilNigerian PiratesOil companies in Nigeria often are accused of takingadvantage of a weak regulatory system regardingimpacts on the natural3

4/13/2011During the 1973-74 Oil EmbargoCars (note size) lined up for gas inNew York City, winter 73-74Embargo gas lineRoadside signin Oregonduring Arab OilEmbargo,Winter 1973-74Storage Sites for theStrategic Petroleum reserve(presently about 727 million barrels)An embargo is any legal restriction imposedon commerce. In modern times, it principallyinvolves decisions by a country or consortiumNOT to sell a certain product or products toexisting or potential foreign (or non-member)customers. An agreement to restrict exports.[A consortium is a group of countries,companies, or financial institutions that haveformally banded together to promote theircommon economic good.]4

4/13/2011OPEC membersThe Organization of PetroleumExporting CountriesptoFounded in 1960 in responseforeign control of domestic oilproduction and pricingOPEC oil production, 2011A cartel is an internationalorganization formed to regulateprices and output in some field ofbusiness.Headquartered in Vienna5

4/13/2011Canadian oil/tar sands The world’s largestknown near-surfacerepository of bitumen(heavy crude oil) mixedin with sandy soils ofNorthern Alberta. Accessible by stripminingg Oil produced fromsteam injection andrefining. A 2006 study estimatedthe economicallyrecoverable oil to beabout 170 billionbarrels.Raw tar sandAlberta Tar Sands Strip Mining6

4/13/2011Ethanol production plant7

4/13/2011Hybrid Corn (center) vs. EarlierVarietiesCorn Harvesting in theMidwestA subsidy is a type ofgovernment-provided financialassistance paid to businesses inorder to help them remaincompetitive in internationalmarkets.Farm/crop subsidies have beencommon in the U.S. for decades.8

4/13/2011A boycott is an action designed toeconomically punish a country or other entityby refusing to buy its trade goods. Anagreement to restrict imports.[Named for Captain C. C. Boycott (1832-1897),a British landowner in Ireland, who in the 1880swas treated in this way by his neighbors for hisharsh treatment of tenants.]Sugar cane is atall grass thatrequires warmtemperatures,lots of moisture,,and a longgrowing seasonto properlymature.Historically labor intensive, sugar cane is nowplanted, harvested and processedmechanically9

4/13/2011Oil Barge on the Rhine River, GermanyU.S. warship in the Suez CanalThe Right of Innocent Passage –any of several points in international law that permitships, planes, trains and commercial motor vehicles ofa given country to enter and pass through another’sterritory so long as it is not prejudicial to the peace,good order or security of the other state.Classically applied to ships at sea, and to trains andcommercial motor vehicles of landlocked statestransiting foreign territory to reach a seaport.Not absolute as applied to non-signers of givenconventions, and in particular to the transiting of acountry’s airspace by foreign aircraft.1888 Convention of ConstantinopleandMontreux Convention of 1936are examples of widely recognizedinternational treaties that pointedlyapply the right of innocent passage tospecific strategic bottlenecks (the SuezCanal and Turkish Straits respectively.)1888 Convention of Constantinople declares the SuezCanal an international waterway, thereby extendingthe Right of Innocent Passage to all ships in transit.A landlocked country -- anindependent territory that iscompletely surrounded by the landof one or more neighboringcountries. Thus, it has no directaccess to the high seas but isdependent on the goodwill of itsneighbors for access to and use ofseaports.10

4/13/2011Landlocked countriesProblems ofLand-locked States Economic vulnerability– Reliance on neighbors for access to the sea– Extra costs of exporting (thus, their products costmore than their competitors’)– Extra costs of importing Political vulnerability– Maintain amiable relations with neighbors– Maintain a low profile in foreign affairs– Maintain a low military profile (do not appear to bea threat to your neighbors)Priority Treaty Principles forDeveloping Landlocked StatesFree transitRight of Innocent PassageAccess to seaportsElimination of tariffsElimination of foreign subsidies11

4/13/2011Government actions that promoteand protect its economic interestsTariff – A fee (duty/customs) imposed on foreignimports designed to make them as costly ormore costly than competing domestic goods,and thereby promote the sale of the latter.Subsidy – a form of government-furnishedfinancial aid that compensates that country’sproducers of certain commercial products so asto allow them to compete with low-cost foreignproviders of the same commodity.Internationalized RiverAn International River is a river that passesthrough different countries and/or constitutesa portion of the border between two States.An Internationalized River is a river that,pursuant to a generally recognized treaty, isopen for navigation to ships of all countries.countries[Note: The economic sgnificance of thisdesignation is a function of the river’snavigability, which may or may not be the casein whole or part.]St. Lawrence Seaway/Great Lakes System[* largely helde*St. Lawrence*ZambeziGreat Lakes/St. Lawrence River ProfileShip approaching Eisenhower Locks,Massena, NY12

4/13/2011The Welland Canal links Lakes Ontario andErie, allowing ships to by-pass Niagara Falls.Shipping in the Welland CanalPort Elizabeth container portWelland Canal locksThe locks at Sault Sainte MarieGlobalization is the worldwidelinking of countries and people intoan integrated economic systemdriven by capitalistic free markets. Itfacilitates cultural diffusion,diminishes the importance ofinternational boundaries, andencourages cultural homogeneity.Increasingly seen as a challenge toState authority.13

4/13/2011Transnational corporations (a.k.a.TNCs, multinational corporations, ormultinationals) are hallmarks ofglobalization. They are characterized byhavingg facilities (e.g.,( g headquarters,offices, factories, plantations, mines,distribution centers, etc.) in differentcountries, often as per tax laws,environmental laws, labor law, andstandard of living.Potential Impacts of TNCs May contribute to or undermine the stability ofgovernments where they operate Relocation of facilities and jobs from one country toanother for reasons related to wages, labor law (orlack thereof), worker benefits, or environmental law TechnologicalT h l i l transfertf Challenging of traditional modes of settlement andeconomy in host country Promote international migration Impact environmental quality Alteration of the global pattern of social well-beingThe World Trade Organization (WTO),headquartered in Geneva, seeks to supervise andliberalize international trade. It’s153 members accountfor 97% of world trade. It regulates trade betweenmembers; provides a framework for making tradeagreements; and offers a dispute resolution process.Seeks to enhance trade involving poorer countries, buthas been hampered by disagreements betweenmembers that export bulk agricultural commodities,and countries with lots of subsistence farmers. Itsannual meetings have become forums for protestsfocusing on the plight of poor countries.14

4/13/2011Worker exploitation:A common criticism of globalizationMaquiladora Originally, a manufacturing plant in northern Mexico,near the U.S. border, specializing in the production ofgoods destined for sale in the U.S. Takes advantage of cheaper Mexican labor; favorablelabor, tax and environmental laws; and proximity toU.S. transportation infrastructure. Sometimes involve sending raw materials orcomponents from the U.S. to Mexico for processing. Now, more generally, a manufacturing facility locatedoutside a client state, but proximate to its borders, totake advantage of factors that minimize the cost of thefinished product.Maquiladora Labor ForceInside MaquiladorasMaquiladora Employment: 1980 - 200615

4/13/2011Mercedes auto-manufacturing plantVance, AlabamaA tax haven is a country, civil division, orterritory where certain taxes are levied at a lowrate or not at all while typically offeringpolitical stability, due process, and lack ofcorruption directed at those seeking relief.According to The Economist, "What .identifies an area as a tax haven is theexistence of a composite tax structureestablished deliberately to take advantage of,and exploit, a worldwide demand foropportunities to engage in tax avoidance."16

4/13/2011Political Corruption, 2010(Transparency International)“The degree to which corruption is perceived to existamong public officials and politicians.”Zug is the administrative center ofCanton Zug, Switzerland17

4/13/2011World Trade OrganizationEconomic Integration: A global ViewDark green original members (1/1/95)Light green subsequent membersDegrees of economic integration:from lowest to highest Preferential trading areaFree trade areaCustoms UnionEconomic UnionEconomic and Monetary Union (FiscalUnion) Complete economic integrationPreferential Trading Area:A trading bloc that gives preferentialaccess tot certaint i productsd t fromfthethparticipating by reducing (but noteliminating) tariffs.Free Trade: A Global ViewFree Trade Area:A trade bloc whose member countrieshhaveagreedd tot eliminateli i t tariffs,t iff quotastand preferences on goods andservices traded between them.18

4/13/2011A Customs UnionA trade bloc consisting of a freetrade area that has a commonexternal tariff. Often seen as a wayto increase economic efficiencywhile promoting closer political andcultural ties between members.An Economic Union:A trading bloc that consists of acustoms union plus a commonmarket. Members have a commonpolicy on product regulation,freedom of movement of goods,services, and factors of production,and a common external trade policy.Economic and Monetary Union:An economic union that also hasadopted a common currency.19

The World Trade Organization (WTO), headquartered in Geneva, seeks to supervise and liberalize international trade. It's153 members account for 97% of world trade. It regulates trade between members; provides a framework for making trade agreements; and offers a dispute resolution process. Seeks to enhance trade involving poorer countries, but