For Professor Ryan: Class Participation

Re: FTA between US and Israel

In taking this class, I decided to chose Israel as a trading partner of US due to its long standing relations bilaterally.

The Free Trade Agreement between US and Israel was the first one to be entered by US. This expanded investments through the reduction of barriers while at the same time promoting regulatory transparency. The major areas of trade under the FTA are mainly agricultural telecommunication and government procurements. Under the FTA, the two countries have mutually benefited through tariff reductions in areas such as US textiles and apparel exports. Israel on its part benefits through agricultural free trade, military defense equipments exports, and precious stones. http://www.israelemb.org/washington/Obama_in_Israel/Pages/US-Israel-Trade-Relations.aspx

However, the FTA pact between the two countries has specifications for qualifying products that meet tariff elimination threshold. Goods and products that are not originally from any of the two countries or have a bigger content of product coming from any of the two countries do not qualify to be given tariff elimination. The benefits on the other hand are numerous since the tariffs for any other products are agreed upon thus, cushioning the two countries of fluctuating tariffs of commodities and in times of economic turmoil.

· Re: DQ: 5.2 International Trade posted by WAWA NGENGE

Aug 06, 2014, 9:53 PM   

The one hidden secret in the discussion about exchange rates and international trade this week is the DOLLAR WORLD RESERVE CURRENCY SYSTEM. Here is a brief Stock Market Oriented analysis of what would happen if the US dollar lost its status as the world reserve currency, as usual, CETERIS PARIBUS:  http://www.globalresearch.ca/the-us-dollars-fragile-reserve-currency-status-the-great-deceiver-the-federal-reserve/5382184  

 

" Washington's power ultimately rests on the dollar as world reserve currency.  This privilege, attained at Bretton Woods following World War 2, allows the US to pay its bills by issuing debt. The world currency role also gives the US the power to cut countries out of the international payments system and to impose sanctions.

As impelled as the Fed is to protect the large banks that sit on the board of directors of the NY Fed, the Fed has to protect the dollar. That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar.

If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.

If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.

Its wars and hundreds of overseas military bases could not be financed."

 

Think about this as you review "free" trade agreements.

 

In addition I recommend that you review the section entitled "FREE TRADE ISN'T WORKING" at file:///home/wawa/Documents/eBook%20Collection/ha-joon-chang-bad-samaritans.pdf in Ha Joon Chang's book, BAD SAMARITANS or T H E M Y T H  O F  F R E E T R A D E  A N D   T H E   S E C R E T   H I S T O R Y    O F   C A P I T A L I S M

 

If you cannot open the link, just search for the book on Google, using ".pdf bad Samaritans ha joon chang" 

Thoughts?

· Comment on Aug 08, 2014, 12:49 PM

Re: DQ: 5.2 International Trade

posted by ADAM HARRIS

Aug 08, 2014, 12:49 PM   

Trade agreements are typically in place when both parties agree that a stable framework for investment would maximize effective utilization of economic resources and improve living standards. One such trade agreement is the US-Bahrain FTA. There are many benefits to include "cooperative efforts related to labor rights and environmental protection" as well as "advancing economic reforms and liberalization in the Middle East" (USTR, 2014). Since it's inception in 2009, Bahrain has opened its services market wider than any previous FTA partner, creating new opportunities for US financial providers and companies alike that offer telecommunications, healthcare, express delivery, audiovisual, architecture, distribution, and engineering services. Finally, because of this FTA, US farmers have significantly increased agricultural exports.

 

USTR (2014). Bahrain Free Trade Agreement. Retrieved on August 08, 2014 from  http://www.ustr.gov/trade-agreements/free-trade-agreements/bahrain-fta

Dear ADAM HARRIS

Regarding your post and the link attached, U.S and Bahrain FTA agreement took effect in the year 2006. Since then, a number of opportunities especially to U.S farmers were created as well as achievement of political reforms to the Bahrain citizens. These are all the essence and positive impacts of bilateral trade agreements. Consequently, the economy of Bahrain grew tremendously after opening its services market where also financial service providers and companies offering audiovisual, telecommunication, healthcare, express delivery, engineering and architecture from US received great boost. The FTA between the two countries also allowed US to venture into the Gulf Cooperation Council of which Bahrain is a member. As you said, the greatest benefit to Bahrain when it entered to an FTA agreement to US is the environmental issues and harmonized labor rights.

· Comment on Aug 09, 2014, 8:41 AM

Re: DQ: 5.2 International Trade

posted by JOHN RUIZ

Aug 09, 2014, 8:41 AM   

Prior to taking this class, I never really thought about just how important these free trade agreements were with other countries. Peace treaties are only as effective as the willingness to continue to follow them, but when you become dependent on another country, you begin to want to keep the peace with another country in order to prevent being cut off. This thought alone really makes me rethink my perception of the United States being so foolish to import more than they export. This country has a significant debt and this class has really shown me that it will never get out of debt no matter what this country does. We might as well apply political transactions to our significant financial lose policies.

· Comment on Aug 09, 2014, 4:59 PM

Re: DQ: 5.2 International Trade

posted by ALFRED MATHENA

Aug 09, 2014, 4:59 PM 

· Comment on Aug 09, 2014, 10:29 PM

Re: DQ: 5.2 International Trade

posted by WAWA NGENGE

Aug 09, 2014, 10:29 PM 

· Comment on Aug 09, 2014, 9:48 PM

Re: DQ: 5.2 International Trade

posted by WAWA NGENGE

Aug 09, 2014, 9:48 PM   

Adam

 

How can two countries with different size economies and military power agree on the meaning of the key concepts in this sentence "cooperative efforts related to labor rights and environmental protection" as well as "advancing economic reforms and liberalization in the Middle East"? Consider the quote below from Ha Joon Chang's 23 things and share your thoughts

 

http://mafhom.files.wordpress.com/2013/02/23-things-they-dont-tell-you-about-capitalism.pdf

We see a regulation when we don't endorse the moral values behind it. The nineteenth-century high-tariff restriction on free trade by the US federal government outraged slave-owners, who at the same time saw nothing wrong with trading people in a free market. To those who believed that people can be owned, banning trade in slaves was objectionable in the same way as restricting trade in manufactured goods. Korean shopkeepers of the 1980s would probably have thought the requirement for 'unconditional return' to be an unfairly burdensome government regulation restricting market freedom. This clash of values also lies behind the contemporary debate on free trade vs. fair trade. Many Americans believe that China is engaged in international trade that may be free but is not fair. In their view, by paying workers unacceptably low wages and making them work in inhumane conditions, China competes unfairly. The Chinese, in turn, can riposte that it is unacceptable that rich countries, while advocating free trade, try to impose artificial barriers to China's exports by attempting to restrict the import of 'sweatshop' products. They find it unjust to be prevented from exploiting the only resource they have in greatest abundance - cheap labour. Of course, the difficulty here is that there is no objective way to define 'unacceptably low wages' or 'inhumane working conditions'. With the huge international gaps that exist in the level of economic development and living standards, it is natural that what is a starvation wage in the US is a handsome wage in China (the average being 10 per cent that of the US) and a fortune in India (the average being 2 per cent that of the US). Indeed, most fair-trade- minded Americans would not have bought things made by their own grandfathers, who worked extremely long hours under inhumane conditions. Until the beginning of the twentieth century, the average work week in the US was around sixty hours. At the time (in 1905, to be more precise), it was a country in which the Supreme Court declared unconstitutional a New York state law limiting the working days of bakers to ten hours, on the grounds that it 'deprived the baker of the liberty of working as long as he wished'. Thus seen, the debate about fair trade is essentially about moral values and political decisions, and not economics in the usual sense. Even though it is about an economic issue, it is not something economists with their technical tool kits are particularly well equipped to rule on. All this does not mean that we need to take a relativist position and fail to criticize anyone because anything goes. We can (and I do) have a view on the acceptability of prevailing labour standards in China (or any other country, for that matter) and try to do something about it, without believing that those who have a different view are wrong in some absolute sense. Even though China cannot afford American wages or Swedish working conditions, it certainly can improve the wages and the working conditions of its workers. Indeed, many Chinese don't accept the prevailing conditions and demand tougher regulations. But economic theory (at least free-market economics) cannot tell us what the 'right' wages and working conditions should be in China.

· Comment on Aug 09, 2014, 8:33 AM

Re: International trade

Dear Adam

It is good that you are realizing the chemistry between trade, bilateral relations and peace. However, one thing you should take into consideration is that fact that, US has a high number of bilateral agreements with many countries than any other single country in the world. Endorsing moral values alongside these trade regulations serves to restore sanity in the trade. With regard to China, you should have analyzed their imports, exports, and revenues alongside its gross GDP. This would have helped you in making a sound criticism of their labor rights. That is the same reason why US-Bahrain FTA pact had hitches in discussing the labor rights so that US Citizens working in Bahrain are not subjected to harsh working conditions

Re: DQ: 5.2 International Trade

posted by JOHN RUIZ

Aug 09, 2014, 8:33 AM   

For over 29 years, the United States has had a free trade agreement with Israel, which was the very first free trade agreement that the United States has ever entered. The Israel free trade agreement serves as a barrier reduction and promotion of regulatory transparency. Over the years, there has been a significant reduction between Israel and the United States in both Imports and Exports, but the United States is still importing far more than they are exporting. The main gains of the Israel free trade agreement is the exportation of pistachios and the United States is able to import Egg plants as well as floral and herbs used for pharmaceutical purposes. The free trade agreement additionally allows an open line of communication with Israel, but over the years there has been several issues between the United States putting into question whether there would be a continued free trade agreement with Israel.

Re: International Trade

Dear John Ruiz

I concur with you on this. The trade partnership between US and Israel has been lengthy and of mutual benefit. Most of US agricultural products and aircraft parts are being exported to Israel. US have been importing architecture, military weapons and precious stones from Israel. This economic partnership has not only boosted the economies of the two nations but also increased their participation in the fight against extremist groups. Such a case is the joint installation of missile interceptor Iron Domes in both Israel and US. Finally, Israel position is strategic in enhancing partnership between US and the Arab league.

· Comment on Aug 09, 2014, 5:07 PM

Re: DQ: 5.2 International Trade

posted by ALFRED MATHENA

Aug 09, 2014, 5:07 PM   

This is true, and I wonder sometimes if there are more things included in the free trade agreements other than just goods.  I would think that the allegiance that we have with Israel may have started with the free trade agreement but has grown to be much more than that.  I also think that if you include the NAFTA agreement we tend to have more of an allegiance with Canada since then as well.  Wawa, do these free trade agreements include other alliances or are they strictly based off of trade and economics?

· Comment on Aug 09, 2014, 12:39 PM

Re: DQ: 5.2 International Trade

posted by SHARRISE WILLIAMS

Aug 09, 2014, 12:39 PM   

The Foreign Exchange is the act of trading different nations' moneys. The moneys take the same forms as money within a country. The greater part of the money assets traded in foreign exchange markets are demand deposits in banks. A very small part consists of coins and currency of the ordinary pocket variety. I have experienced The Foreign Exchange policy with one of the patients at my health care facility. Her pension check is deposited into her patient account at the facility and because she is of Dutch descent, her payment comes in differently each month due to the rate of exchange changing. Sometimes there is a $15-$20 difference each month and then she receives a one time payment each year which comes from the amount that she would receive if her payments were the same each month but they differ so she still gets her amount throughout the year.

 

 

International Economics, Fourteenth Edition

Chapter 17: The Foreign Exchange Market