Timeline: World Trade Organization A chronology of key events:

The General agreement on Tariffs and Trade was createt in 1947 by the Bretton Woods conference to help stimulate economic recovery after World War II. The GATT would function to reduce and eliminate trade barriers, thus helping economies recover. The GATT was an agreement, not an organization so on January 1, 1995, the World Trade Organization was formed. The following is a timeline retrieved from BBC News. We will take important dates from this and add it to our other timeline to find the most important international trade events.

1947 October - 23 countries sign the General Agreement on Tariffs and Trade (Gatt) in Geneva, Switzerland, to try to give an early boost to trade liberalisation.

1947 November - Delegates from 56 countries meet in Havana, Cuba, to start negotiating the charter of a proposed International Trade Organisation.

1948 March - Charter of International Trade Organisation signed but US Congress rejects it, leaving Gatt as the only international instrument governing world trade.

1949 - Second Gatt round of trade talks held at Annecy, France, where countries exchanged some 5,000 tariff concessions.

1950 - Third Gatt round held in Torquay, England, where countries exchanged some 8,700 tariff concessions, cutting the 1948 tariff levels by 25%.

1955-56 - The next trade round completed in May 1956, resulting in $2.5bn in tariff reductions.
1960-62 - Fifth Gatt round named in honour of US Under Secretary of State Douglas Dillon who proposed the negotiations. It yielded tariff concessions worth $4.9bn of world trade and involved negotiations related to the creation of the European Economic Community.

1964-67 - The Kennedy Round, named in honour of the late US president, achieves tariff cuts worth $40bn of world trade.

1973-79 - The seventh round, launched in Tokyo, Japan, sees Gatt reach agreement to start reducing not only tariffs but trade barriers as well, such as subsidies and import licensing. Tariff reductions worth more than $300bn dollars achieved.

1994 - Trade ministers meet for the final time under GATT auspices at Marrakesh, Morocco to establish the World Trade Organization (WTO) and complete the Uruguay Round.

1995 - The World Trade Organization is created in Geneva.

1999 - At least 30,000 protesters disrupt WTO summit in Seattle, US; New Zealander Mike Moore becomes WTO director-general.

2001 November - WTO members meeting in Doha, Qatar, agree on the Doha Development Agenda, the nineth trade round which is intended to open negotiations on opening markets to agricultural, manufactured goods, and services.

2002 August - WTO rules in favour of the EU in its row with Washington over tax breaks for US exporters. The EU gets the go-ahead to impose $4bn in sanctions against the US, the highest damages ever awarded by the WTO.

2002 September - Former Thai deputy prime minister Supachai Panitchpakdi begins a three-year term as director-general. He is the first WTO head to come from a developing nation.

2003 September - WTO announces deal aimed at giving developing countries access to cheap medicines, hailing it as historic. Aid agencies express disappointment at the deal.

2003 September - World trade talks in Cancun, Mexico collapse after four days of wrangling over farm subsidies, access to markets. Rich countries abandon plans to include so-called "Singapore issues" of investment, competition policy and public procurement in trade talks.

2004 April - WTO rules that US subsidies to its cotton farmers are unfair.

2004 August - Geneva talks achieve framework agreement on opening up global trade. US and EU will reduce agricultural subsidies, while developing nations will cut tariffs on manufactured goods.

2005 March - Upholding a complaint from Brazil, WTO rules that US subsidies to its cotton farmers are illegal.

2005 May - WTO agrees to start membership talks with Iran.

2005 September - Frenchman Pascal Lamy takes over as WTO director-general. He was
formerly the EU's trade commissioner.

2005 October - US offers to make big cuts in agricultural subsidies if other countries, notably EU do the same. EU responds, but France opposes more concessions.

2005 November - WTO approves membership for Saudi Arabia.

2005 December - World trade talks in Hong Kong begin amid widespread belief that they will not succeed in making a breakthrough.

2007 January - Vietnam becomes the 150th WTO member state.

http://news.bbc.co.uk/1/hi/world/europe/country_profiles/2430089.stm

International Trade Policy and State Legislation

This is a video of a California Senate Select Committee Town Hall meeting on trade policy convened in West Hollywood by California State Senator Sheila Kuehl along with Bev Perry, Mayor Pro-Tem, Brea; Maria Cain, Trade Analysis, Asia Pacific Environmental Exchange; Green Party member Mike Feinstein, Mayor, Santa Monica; Green Party member Kevin McKeown, Mayor Pro-Tem, Santa Monica; Diane Watson, US House of Representatives, Los Angeles; and Anne Cecelia Blackshaw, consultant, CA Senate Select Committee on International Trade Policy & State Legislation.

Post 1945 Timeline

1946 - 1995

1946 The Bretton Woods system goes into effect; it had been planned since 1944 as an international economic structure to prevent further depressions and wars. It included institutions and rules intended to prevent national trade barriers being erected, as the lack of free trade was considered by many to have been a principal cause of the war.

1947 23 countries agree to the General Agreement on Tariffs and Trade to rationalize trade among the nations. Low tariffs are beneficial to the economies of the nations in that it encourages imports, increases government revenues and gives local industries some motivation to improve their efficiency. High tariffs discourage trade between the nations, reducing or eliminating government revenues from this sector of taxation, and giving more monopoly power to local industry. So, low tariffs are beneficial to the world economy but not free trade. Free trade does not necessarily mean increased trade among the nations. Nations who cannot compete in the world market will have their standard of living reduced and this reduction in their standard of living will reduce world trade. Free trade does not enable governments to earn taxes from this sector. Free trade transfers monopoly power from local industry to foreign companies and the job of government regulating the economy for the common benefit of everybody will be lost. Foreign companies cannot be regulated by government because they are aliens to a local economy.

1948 Ludwig Erhard's trade liberalization is credited by some with making Germany quickly competitive in industrial production after the damage of the Second World War.

1948 The International Trade Organization's charter is agreed at the UN Havana conference on Trade and Employment, but blocked in the U.S. Senate.

1951 The European Coal and Steel Community, forerunner of the European Union, creates a free trade area for certain raw materials inside Europe.

1959 Oxfam opens the first World shop, retailing foreign goods under fair trade principles.

1960 European Free Trade Association established.

1971 Zangger Committee formed to advise on the interpretation of nuclear goods in relation to international trade and the Nuclear Non-Proliferation Treaty (NPT).

1971 Without accepting the doctrines of free trade the, "Comprehensive Program for Socialist Economic Integration" moved the Comecon countries to world prices in calculating the value of intra-Comecon trade. The free market price was observed for five years and the mean of these prices used to give the relative value of the imports and exports between communist countries in the trading group over the following five years.

October 16, 1973: OPEC raises the Saudi light crude export price, and mandate an export cut the next day, plus an Embargo on oil exports to nations allied with Israel in the course of the Yom Kippur War. The cartel's apparent ability to manipulate prices by restricting supply was taken by many oil importers as an example of the "reciprocity" violation of free trade advanced by John Stuart Mill in 1848.

1974 The oil price shock was felt around the world, because production reductions increased the international price even on the open market (to countries outside the OPEC embargo). Some oil importing countries respond with the rationing of oil consumption.

1974 The Nuclear Suppliers Group (NSG) was created to moderate international trade in nuclear related goods, after the explosion of a nuclear device by a non-nuclear weapon State.

1975 Inter-Comecon trade tied even more closely to the "world price" dictated by free trade.

1985 The Australia Group was formed to moderate international trade in chemical & biological weapons and associated goods.

1987 The Missile Technology Control Regime came into being with the aim of limiting the proliferation of the means of delivery of weapons of mass destruction, using international trade controls.

1988 Solidaridad launches "Fair trade" labeling with the sale of Mexican coffee which was certified to meet ethical standards of sustainable development. This and other initiatives promoted the idea that some trade between regions could be socially beneficial (outside of the economic elites). The movement is especially active in campaigning to remove agricultural subsidies in the developed world (which some see as campaigning for free trade).

1992 European Union lifts barriers to internal trade in goods and labor.

January 1, 1994 NAFTA takes effect

1994 The GATT Marrakech Agreement specifies formation of the WTO.

January 1, 1995 World Trade Organization is created to facilitate free trade, by mandating mutual most favored nation trading status between all signatories.

1996 - Present day

1996 The Wassenaar Arrangement - moderates international trade in conventional arms and associated goods.

~ info from Wikipedia.org, edited by me

Time Line

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1799 The Dutch East India company, formerly the world's largest company goes bankrupt, partly due to the rise of competitive free trade.

•1815 The British Corn Laws are introduced, preventing grain imports.

•1817: James Mill, Robert Torrens, and David Ricardo showed that free trade might benefit the industrially weak as well as the strong, in the famous theory of comparative advantage.

·1840 Opium War- Britain invades China to overturn the Chinese bar on opium imports. The British case was argued in Ricardian terms against the import barriers the Chinese wished to impose; parliament argued that the trade in opium should not be restrained.

•1848 The Infant Industry Scenario developed by J.S Mill

•1860 Free trade agreement finalized between Britain and France under the presidency of Napoleon III

•1868 The Japanese Meiji Restoration leads the way to Japan opening its borders and quickly industrializing through free trade

•1892 France introduces the Meline Tariff, ushering in an era of protectionist measures.

•1897 In the Dingley Tariff, U.S. import duty is raised to a 46.5% average.

•1930 The most famous trade restriction in history the Smoot Hawley Tariff Act roughly doubled the U.S. tariff levels from those set in 1913.

•1933 Bertil Ohlin publishes Interregional and International Trade, giving conditions under which a comparative advantage can exist despite identical technologies internationally (the Heckscher-Ohlin Model).

For Gieselman

International Trade

19^th Century - 1945

• The pre-eminence of free trade was primarily based on the estimate of whether or not it was in any particular country's self-interest (a.k.a national advantage) to open its borders to imports in the 19^th century.

• 1817 – David Ricardo, James Mill and Robert Torrens show that free trade might benefit the industrially weak as well as the strong, in the Comparative Advantage Theory (a.k.a. "Ricardo's Law") which explains why it can be beneficial for two parties to trade without barriers if one is more efficient at producing goods or services needed by the other.

• John Stuart Mill proved that a country with monopoly pricing power on the international market could manipulate the terms of trade through maintaining tariffs, and that the response to this might be reciprocity in trade policy. This was taken as evidence against the universal doctrine of free trade, as it was believed that more of the economic surplus of trade would increase to a country following reciprocal, rather than completely free, trade policies.

• Mill developed the “infant industry” scenario which promoted the theory that the government had the "duty" to protect young industries, if only for a time necessary for them to reach full capacity. This became the policy in many countries attempting to industrialize and surpass English exporters.

• The Great Depression was a major economic recession that lasted from 1929 until the late 1930s. During this period, there was a great drop in trade. The lack of free trade was considered by many as a principal cause of the depression.

• Only during World War II did the Great Depression end in the United States.

1944 – 44 countries signed the Bretton Woods Agreement, which was intended to prevent national trade barriers, and avoid depressions. It set up rules and institutions to regulate the international political economy: the International Monetary Fund and the International Bank for Reconstruction and Development (later divided into the World Bank and Bank for International Settlements).

International Trade- Definition- The exchange of goods and services across international boundaries or territories.

Industrialization, advanced transportation, and globalization all have a major impact on international trade.

International Trade Theory-

Ricardian Model- (RESEARCH FURTHER) Focuses on comparative advantage, perhaps the most important concept of international trade theory. Countries specializing in what they produce best. Countries will fully specialize in making these products instead of producing a broad array of goods. The Ricardian model’s flaw is that it does not consider factor endowments.

Heckscher-Ohlin Model- (RESEARCH FURTHER) Alternative to the Ricardian model. More complex than the Ricardian model but not much more accurate. According to the Heckscher-Ohlin model, the pattern of trade is determined by differences in factor endowments. Countries will export goods that make intensive use of locally abundant factors that are locally scarce. If there is an increase of the price of a good, the owners of that good will profit. This model is ideal for particular industries and in understanding income distribution.

Gravity Model- (RESEARCH FURTHER) Presents a more empirical analysis of trading nations than the previous two. The gravity model predicts trade based on the distance between the two countries and the interaction of the countries economic sizes.

Regulation of International Trade- For a long time the belief of mercantilism caused most nations to have high tariffs, and many restrictions on international trade. In the 19^th century, a belief in free trade became prominent. It was usually supported by the most economically powered nations in the world. (RESEARCH FURTHER).

During recessions there is often strong domestic pressure to increase tarrifs to protect domestic industries. This occurred around the world during the Great Depression.

Trade Theories

Ricardian Model

David Ricardo constructed the Ricardian Model in the 19th century. Ricardo was opposed to tariffs and other restrictions on international trade so he developed the idea of comparative advantage. Comparative advantage is "the ability to produce a good at a lower cost, relative to other goods, compared to another country." According to Ricardo, with perfect competition and undistorted markets, countries tend to export goods in which they have a comparative advantage.

Important Ricardian Model Ideas

Trade occurs due to differences in production technology- Ricardo constructed his model assuming the only difference between two countries is their production technology. Countries trade because of differences in technology.

Trade is advantageous for everyone in both countries- Ricardian model shows that everyone can benefit from trade. This is assuming that there is only one factor of production.

Even a technologically inferior country can benefit from free trade-

A developed country can compete against some low foreign wage industries.

Heckscher-Ohlin Model

The Heckscher-Ohlin Model is a "general equilibrium mathematical model of international trade. It was developed by Eli Heckscher and Bertil Ohlin to build on Ricardo's theory of comparative advantage by predicting patterns of trade based on factor endowments of a region. Factor endowments are the amount of land, labor, capital, and entrepreneur ship that a country possesses and can exploit for manufacturing. The Heckscher-Ohlin model says that countries will export products that are abundant while importing products that are scarce. Relative endowments of the factors of production determine a country's comparative advantage. Countries have comparative advantages with the goods that are abundant in their nations.

Gravity Model

The gravity model estimates the pattern of international trade. It consists of factors of geography and distance but can be used to test other economic theories of trade.