Trade

Name:  Trade tariffs on china

Source of article: The NEWYORK TIMES

Publication date: 11th April 2018

A threat emerged from state house that president Donald trump would impose tariffs on imports from china in the months to come. The threat sparked mixed reactions across the economic circles; one faction saying that the laws would boost the countries negotiation power over the Chinese government as another says that the laws were detrimental to the economy and they were made in a rush for the purpose of threatening the Chinese government.

Drawing conclusions from the effect of tariff imposition on steel and aluminum from china that was passed into law last year; that the economy has come down by 0.1 percentage points, the economists against the idea think they have a case to prove. Still, the tariff threat has been upheld despite the economic tantrums.

Tariffs are meant to limit imports and create market for locally products but the adverse effect from this will result in prices going a little higher for business men that vend Chinese goods and ultimately the consumer will feel the pinch. If the tariffs are maintained over the years the living standards among the American people will go down.

Skeptics have said that the tariffs have been designed to scare china but not raise the economic standards of American or the nation. Arrays of economists suggest that free trade be enacted for realization of economic growth.I agree with the faction that is against the increase of tariffs on Chinese imports as the results over time would be devastating.

What is the need of imposing tariffs if they neither boost nor increase economic efficiency? Instead of pulling out of the Trans pacific partnership then using the tariff threat; the government would have considered rallying other countries behind it against china. A pact with other countries would have cowed the Chinese authorities.

Reason behind this threat is that the Americas deficit in goods to china is worth $370 billion. I suggest the threat be dropped.Protectionism is the economic policy that revolves around tariffs. This policy suggests that countries should impose high tax on import if they want their local companies to thrive. In its dynamics, proponents suggested that the laws, taxes and quotas be formulated but they also stated that this will be killing competition and the end consumer will feel the pinch as the prices of the basic commodities will go up significantly over the years.

Reference

New york times websitehttps://mobile.nytimes.com/2018/04/11/business

Introduction

This paper is based on business to business marketing and this paper is based on 4 courier services FedEx, UPS, TNT and DHL. The paper is going to start with by finding out what is going on within each of the organizations and how each organization compares with the others, who owns each of these organizations, what is their relative market share do they work in the same market, see their financial performances over the last few years, what strategies they have applied to enter new markets, and find out of there have been any recent mergers or takeover’s in the company. It is going to be followed by a comparison between 2 companies to find out their competitive advantage other one another, to discuss advantages and disadvantages of how the two organizations segment their B2B market.

It is general familiarity that DHL and TNT have a strong foothold in the US market, the land and air dominance is in the hands of UPS and FedEx in that order. Even though both companies offer comparable services both of them have complete opposite business philosophies. All the above businesses are trying to achieve worldwide supremacy as far is the Logistics Market is concerned, however in the last decade or so these companies are struggling and this effort has strengthened by a continuous flow of acquisitions.

For instance, Deutsche Post World Net (DPWN), the parent company of DHL, has acquired additional 50 companies which are mainly situated in Europe. Another example would be that UPS from the time when it went Public is trying to quickly fill out its excess Air Express capacity; FedEx copied this act by buying ground transportation brand names. These companies are working at break neck speed to expand and determine so that they are able to serve the whole supply chain alongside the most significant trade routes.

It must be remembered that all these four organizations are in the same business that is the courier service and all of them are competitors to one another, and they are in the same markets as well, their customers are the same as well.

FedEx

FedEx (Federal Express) Corporation is a public company it was created FDX Corporation in January 1998, when it acquired the Caliber System Inc. When FedEx purchased Caliber it started off by offering other services along with express shipping, since Caliber has other subsidiaries the FDX Corporation had to oversee these operations as well, these subsidiaries incorporated RPS, a small package land service; Viking Freight  a local but less-than-truckload freight carrier (which provide servers to western part of United States);

Roberts Express, an advanced, shipping provider; Caribbean Transportation Services that provides services of airfreight forwarding (connecting United States and Caribbean), and lastly Caliber Logistics and Caliber Technology used to provides services of logistics and technology solutions to the company and which are now overlooked by the FDX corporation. The FDX Corporation has to over look their operations (that is the original air division, Federal Express) as well along to those of the Caliber. The company employs somewhere around 252,000 people. The major competitors of the FedEx Corporation are DHL, TNT and UPS. (FedEx, 2009)

FDX Corporation decided to change its name to FedEx Corporation in the year 2000 and it decided to re-brand every one of its subsidiaries also. Federal Express was rebranded by the name of FedEx Express, RPS as FedEx Ground, Roberts Express was given the name FedEx Custom Critical, and Caliber Logistics and Caliber Technology were combined as one and if was rebranded as FedEx Global Logistics. The company decided to launch a new subsidiary called the FedEx Corporate Services (the services it performs are centralizing the sales of the company, marketing, and customer services) but for all of the subsidiaries of FedEx Corporation. Other acquisitions of the company are as follows:-

• In February 2000, FedEx purchased Tower Group International (a global logistic company) along with World Tariff (which is a customs duty and tax information firm) and both were combined together to form FedEx Trade Networks.
• In 2004 FedEx Corporation bought Kinko’s Inc. which was privately company, and it was rebranded as FedEx Kinko’s. This helped the company to expand itself and enter a new market (that is the general public). After this purchase the company was now able to provide FedEx shipping in all FedEx Kinko’s locations. It was decided to drop the Kinko’s name altogether in 2008, and it was changed to FedEx Office.
• Parcel Direct was purchased and rebranded as FedEx SmartPost in 2004
• In 2007 FedEx acquired DTW Group and PAFEX
• In 2008 it was rumored that FedEx plans to purchase TNT, but it is not so. (FedEx, 2009)

UPS

UPS is the abbreviation of United Parcel Service, Inc. which is a publicly owned company; it is considered to be the world’s largest package delivery service. The company delivers more than 150 million packages a day in more than 200 countries around the globe and it caters to approximately 6.1 million people around the world as well. From the year 2005 the company has included logistics and other transportation-related areas in its operations as well. The major competitors of United Parcel Service (UPS) are FedEx, DHL, and TNT.  (UPS, 2009)

The company was founded in 1907 as the American Messenger Company, in 19143 the company was merged with Evert McCabe (who was a competitor), and they formed the Merchants Parcel Delivery and in 1919 the company decided to rebrand its name and call themselves United Parcel Service (UPS). The company decided to expand their services in 1949 and they did just that by purchasing the rights to common carrier. Blue Label Air was created in 1952, which helped the company a great deal to deliver its packages to its customers. The company then decided to expand its service in Europe and by 1976 it was able to do with the help of Blue Label Air. In 1988 the company launches its own airline (that is UPS Airlines). In 1999 the company decided to go public.  (UPS, 2009)

UPS entered a new market in 2004 that is the heavy freight business and then went along by purchasing the Menlo Worldwide Forwarding (which is a former subsidiary of Menlo Worldwide), then announced that it is going to rebrand it by calling it the UPS Supply Chain Solutions. Other acquisitions of the company are as follows:-

• In the year 2005 the company completed its acquisition of less – than – truckload (LTL) trucking a company called the Overnite Transportation. The acquisition cost UPS an amount of $1.25 billion. And by 2006 the company decided to rebrand Overnite Transportation and call it the UPS Freight.
• LYNX Express Ltd. (which is an independent parcel carrier in the United Kingdom) was purchased by UPS in the year 2005; the acquisition of the company cost UPS an amount of $97.1 million. With the help of this purchase the company was able to expand its services in UK as well along with a joint package car centre operation in 2006 it was able to expand even more.
• United Parcel Service (UPS) celebrated its 100^th anniversary in 2007.

TNT

TNT N.V. is an international express and mail delivery service company from Netherlands. TNT operates as the national postal service under TNT Post in Netherlands. The company is a public company. The company provides its postal services to eight other European countries as well, in which UK, Germany, Italy and Belgium are also included. In 2008 the mail division of the company recorded a sale of €4.2 billion and the express division of the company recorded a sale of over €6.6 billion, this is it increased by 1.6% from the previous year. In 2008 the company reported revenue of €11.1 billion and operating income of 982 million. TNT employs more than 163,000 people. The major competitors of TNT are FedEx, DHL and UPS. The aircraft of TNT operates under the code of IATA code of TAY (that is TNT Airways). (TNT, 2008)

TNT express which is a delivery express service, which operates in 65 countries and delivers documents and parcel over 200 countries.  In 2006 the company sold its logistics unit, so that they could focus on other activities like networking, mail and delivery services. The company over the last few years has acquired some road freight companies from China, India and Brazil; it helped the company to expand itself overseas. TNT has been expanding its services and operations in Middle East as well as in South America. Other acquisitions of the company are as follows:-

• In 1992 the Canadian post office and the Consortium of the European post offices were purchased by TNT.
• The Royal PTT Nederland called KPN took over TNT (but it was a friendly takeover) in the year 1996.
• In 1998 the postal division of TNT was demerged from KPN and it became TGP. TGP then purchased Jet Services of France and integrated it with TNT’s European operations.
• From 1999 to 2005 the company TGP moved into the logistic market and bought a great deal of logistics companies all over the globe.
• In 2006 TNT decided to resale its logistics to division to a company called Apollo Management. (TNT, 2008)

DHL

In 1969 DHL was founded by Adrian Dalsey, Larry Hillblom and Robert Lynn, therefore DHL is the abbreviation Dalsey, Hillblom and Lynn. They started out with by providing a courier service, but it was between the Continental United States and Hawaii. The company then decided to expand its services and business from there. Deutsche Post in the year 1998 began to acquire shares in DHL, and by 2001 they had reached the majority of the ownership and by the 2002 Deutsche Post has purchased the entire company. Deutsche Post started to absorb DHL in its personal Express partition, because of that the company grew with the assistance of DHL (that is expanding DHL brand to other Deutsche Post divisions, business units and as well as subsidiaries).

Today, the DHL Express shares with other Deutsche Post business its DHL brands like DHL Global Forwarding & Freight and as well as DHL Supply Chain. The different products that are provided by the company are DHL Express Worldwide, DHL Express 9:00 and DHL Express 12:00. The company employs somewhere around 285,000 people. The company has an annual sale of$65 billion in annual sales. The major competitors of the DHL are FedEx, TNT and UPS. In the beginning of 2009 DHL decided to end its domestic delivery service in US, this meant UPS and FedEx were now the only two chief express parcel delivery service businesses in the US.  Deutsche Post acquired Airborne Express and began to combine its business doings with DHL in 2003. (DHL, 2009)

Other acquisitions of the company are as follows:-

• DHL Express in 2004 decided to invests €120 million in an Indian domestic courier Blue Dart and became the majority shareholder in that company
• Deutsche Post in 2005 acquired Exel plc completely and started to integrate Exel operations into its own Logistics division, the company also decided to add its well known DHL brand, which was purchased from DHL Express and decided to form DHL Exel Supply Chain. (DHL, 2009)

Market Share

Market share is the company’s sales divided by the total sales of each and every company which is in the business of a specific product market. The market share can be calculated on the company’s actual sales or even the sales that have been forecasted by the management of the company. The market share is mostly used by the company’s management to foretell about the future sales and it also compares the company’s product with other same competing products, in other words it tells about the market position of the product. It also may vary depending on the unit sales to price differences across competitors. As we know that companies do not reveal how that company is doing regarding its major competitors. Therefore the management of the company needs to track down its market share within the industry. (Kotler, 1997)

The market share of these companies in United States is as follows:-

The market share of these companies in international market is as follows:-

Q1) Choose any 2 of the following organizations and use examples to explain what it is that gives them their competitive advantage

The companies that I have chosen for this comparison between the two companies are FedEx and UPS, both of the companies are operating in the United Sates and both of them are in the same service that is delivering packages and postal. UPS and FedEx are primary competitors of one another, for example, FedEx had $35.21 billion revenue, whereas UPS had $49.59 billion revenue in 2007.

FedEx

FedEx has 22% of the market share in the United States; the company needs to remain one of the major companies that deliver packages in that area, and to do that it needs to have some competitive advantage over its competitors like UPS.

• One of the ways that the company can gain competitive advantage is with the help of foreign trade, why, because in the last few years the company’s annual growth has increased by 14% and with the purchase of DTW Group and PAFEX in china the company will be able to gain a competitive advantage over its competitors.
• Another competitive advantage FedEx can have over its competitors is by expanding its Freight, by doing that the company will be provided by immediate increase in the revenue and it will stimulate regional fright businesses as well. For example, it can be done with the acquisition of Watkins.
• Online retailing is also one of those things which will help FedEx have a competitive edge over its competitors. With the help of internet the company will be able to save time and cost and will be able to perform better. (FedEx, 2009)

UPS

UPS has 48% of the market share in the United States; the company needs to remain one of the major companies that deliver packages in that area, and to do that it needs to have some competitive advantage over its competitors like FedEx.

• With the help of global sourcing the company will be able to get a competitive advantage over its competitors. The outsourcing supply chain management is considered a benefit for UPS, why, because, it will help to capitalize the company in the market with the projected increase (that is increase in the delivery service). And if the company builds a global capacity, the company will surely become the market leader in US and as well as in International Markets.
• If UPS is able to capture the Express business in the US, it will be able to gain an advantage over FedEx. It is common awareness that UPS has 36% market share in the express market, whereas FedEx has 49%.
• By the execution of technology in their processes the company will attain an added advantage. (UPS, 2009)

Q2) Choose any 2 of following organizations and discuss the advantages and disadvantages of how the 2 organization segment their B2B market.

The companies that I have chosen for this comparison between the two companies are FedEx and UPS, both of the companies are operating in the United Sates and both of them are in the same service that is delivering packages and postal.

FedEx

Advantages

• With the help of B2B market, FedEx has made sure that the customers are aware of the company’s services in US and well in UK.
• The company has used viral marketing to promote its US next day delivery service, which is plus advantage for the company.
• With the help of internet technology the company is able to advertise about itself anywhere on the globe, plus it is quite cheap, it saves time and money of FedEx. (FedEx, 2009)

Disadvantages

• Disadvantage for FedEx due to B2B marketing on the web can create security concerns, it will become easy for the other competitive companies to gain access to the company’s private information (FedEx, 2009)

UPS

Advantages

• With the help of B2B marketing the customers will become aware of the company, and the company will be able to communicate more efficiently with their target audience.
• It will save time and cost for the company
• With the help of B2B marketing UPS will be able to grow, the company’s capacity to produce services will increase and the company will be able to expand itself in global markets and will be able to diversify as well. (UPS, 2009)

Disadvantages

• The disadvantage of B2B marketing for the company would be that it will become hard for the company to keep a thorough check on the electronic payments to make sure that it is secure, as the company expands itself. (UPS, 2009)

Q3a) Why is DHL retreating from the US market?

DHL is retreating from US because Deutsche Post expects that DHL express operation in the US is going to lose $1.5 billion because last year the company had a loss $1 billion last year. And another reason is that the company’s major customers and clients have been taking their business to their competitors and the company is losing money because of that as well and it will not be able to survive if this keeps on happening. Another reason for the company to be retreating is that due to the financial crisis there has been a decrease in the freight-delivery industry (that is railroads, trucking and ocean shipping), and because that DHL has become another victim of this crisis. (Dade, Roth & Esterl, 2008)

Q3b) What effect might this have on FedEx, UPS and TNT?

The effect of this retreat on FedEx, UPS and TNT is that they are competing against one another to gain the market, which is being left behind DHL. And to these companies the retreat of DHL form US is good news; and companies like FedEx and UPS have been wooing DHL’s customers in the past few months since the announcement by DHL. Walgreen Co., the Deerfield, Ill is one of the major clients of DHL and FedEx and UPS have been wooing it persistently, so that they are able to capture the market which has fallen due to the crisis. (Hannon, 2009)

Q4) Explain and critically discuss the advantages to TNT in the UK B2B logistics market if their bid for a part of Royal Mail succeeds?

TNT has been widely tipped as being the preferred company to acquire a large portion of the UK’s Royal Mail if the intended privatization of Royal Mail goes ahead. And if the bid for the part of Royal Mail succeeds then there would be numerous advantages for TNT. Some of these advantages are as follows:-

• It would have been able to provide advancing in liberalization by forcing the incumbent which in the end is going to provide an access to UK network for TNT
• The company will be able to expand its business and operations and will be able to enter a new market entirely
• The company would have increased its market share in Europe, and will be able to grow and have new opportunities to peruse
• It would have been the best strategic move of the company. (Hawkes, 2007)

Bibliography

CAMPAIGN NEWS: FedEx goes viral to promote US next-day delivery service (2005), available from ; http://www.b2bm.biz/news/?groupId=13181;articleId=24402;, accessed on 28^th April’09

Dade, C, Roth, A ; Esterl, M (2008), DHL Beats a Retreat from the U.S., available from ; http://online.wsj.com/article/SB122609929212709771.html;, accessed on 28^th April’09

DHL – official website (2009), available from ; http://www.dhl.com/splash.html;, accessed on 28^th April’09

FedEx – official website (2009), available from ; http://www.fedex.com/;, accessed on 28^th April’09

FedEx (2009), available from ; http://www.wikinvest.com/stock/FedEx_(FDX);, accessed on 28^th April’09

FedEx Shows Gains in Market Share (2005), available from ; http://outsourced-logistics.com/logistics_services/outlog_story_7030/;, accessed on 28^th April’09

Hannon, D (2009), DHL’s exit from the U.S. market leaves small package market share up for grabs, available from <http://www.purchasing.com/article/CA6628618.html>, accessed on 28^th April’09

Hawkes, S (2007), Royal Mail heads off war on two fronts with management deal, available from <http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article2599678.ece>, accessed on 28^th April’09

Key Features & Advantages of B2B (2009), available from < http://www.management-hub.com/business-management-b2b.html>, accessed on 28^th April’09

Kotler, P (1997), Marketing Management: analysis, planning, implementation and control. Prentice Hall

Land, J (2008), Government welcomes TNT interest in Royal Mail ‘partnership’, available from  < http://www.24dash.com/news/Central_Government/2008-12-16-Government-welcomes-TNT-interest-in-Royal-Mail-partnership>, accessed on 28^th April’09

Shermach, K (2006), B2B: Getting Search Engine Marketing in Sync, available from < http://www.ecommercetimes.com/story/52728.html>, accessed on 28^th April’09

TNT – official website (2008), available from < http://www.tnt.com/express/en_us/site/home.html>, accessed on 28^th April’09

United Parcel Service (UPS) (2009), available from <http://www.wikinvest.com/stock/United_Parcel_Service_(UPS) >, accessed on 28^th April’09

UPS –official website (2009), available from < http://www.ups.com/>, accessed on 28^th April’09

There are tremendous potentials for trade to play a central role in driving and sustaining growth and poverty reduction in Kenya. The Micro, Small, and Medium Enterprises (MSMEs), cuts across all sectors of the Kenyan economy but face various development challenges like overreliance on agriculture which mainly depends on unpredictable weather, underdevelopment of Information, Communication and Technology and lack of market information of local goods both locally and internationally.

This project will provide a solution to investors and MSMEs by providing information on the various investment opportunities available in Kenya apart from agriculture, know about the various trade policies to avoid unfair trade and also provide a platform where local companies can upload their company profiles and the ministry promotes their products at trade fairs at an international level.

Introduction

The Ministry of Trade’s current mandate is: Trade development policy; Development of micro and small business; Fair trade practices and consumer protection; Private sector development and international trade affairs. The ministry will champion the promotion of both domestic and foreign trade through creation of an enabling business and investment environment as highlighted in this project proposal. The purpose of this proposal is to explain in detail the aim of the project, the methods used in the implementation of the system, scope of the system and budget and time schedule for the implementation of the project.

It begins with the introduction which introduces the system to be developed. The next part is the problem statement, the literature review, the scope of the system and the requirements for the system. In the scope of the system we have the system functionalities and its limitations. Since the system is to be developed within a located time frame and budget constraint, it is imperative that the proposal also contains the budget and time schedule. This explains the time schedule for the system and also the budget for the system.

Problem Statement

Kenya trade industry faces a number of challenges: unsound business regulatory framework leading to multiple licensing and heavy or cumbersome regulations for SMEs which in turn leads to high cost of business transactions; Lack of comprehensive trade information on the existing and emerging markets to investors and SMEs. Lack of sound business managerial skills and exposure to international best business practices has hampered the growth of the MSE sector.

To overcome the problem a system needs to be developed with the springboard objective of providing Kenyans with a centralized location where they can get trade information and thus lead to economic growth and realization of vision 2030.

Objectives

1. To develop a successful Ministry of Trade web portal
2. To identify conditions for successful implementation of a new improved system.
3. To enhance access of trade information to Kenyans.

Literature Review

Having collected information on the ministry of trade I was able to define the main drawbacks associated with the services of the industry. Information sharing between the ministry and the business people is not easy. Enormous opportunities exist in the domestic, regional and international markets. These opportunities should be fully exploited through the systematic promotion of Micro, Small, and Medium Enterprises (MSMEs) and providing information to them.

It is crucial to note that as trade becomes free and global, technological innovations will become increasingly important, offering consumers more and more options at cheaper prices in the country and all over the globe. With this system in place all the requests for trade information, will be available to recipients at any given time. Therefore potential users’ are:

• Investors both local and international.
• Consumers.
• Other ministries in the government that work closely with ministry of trade.
• Owners of small and medium sized businesses.

Scope of the system

The web portal will aid in the availing all the details of the trade industry. It will, as its name suggests, be place where the ministry can interact with the general public on matters pertaining its mode of operation. There are several issues about the system’s scope.

Standard Requirement

The requirements include the following:

Computers

System Requirement

Hardware requirements

Processor – Pentium IV with

2. 0 GHz or higher

Memory – 1GB of RAM or more

Hard Disk size – 320 GB for host, 20 GB for client

Application program

Programming: PHP and JavaScript, Database design: MySQL, Interface: Macromedia Dream weaver, Macromedia fireworks, Macromedia Flash, Web browsers: Mozilla Firefox, Internet explorer, Web server: Apache, System: Linux and Windows.

Operating System

Windows XP (32-bit), Vista(32 – 64-bit), or Windows 7 (32 – 64-bit) ? Linux

Development Process

I’ve a number of steps as shown in the flow diagram below:

Project Schedule And Budjet

Project schedule

Ministry of Trade web portal is a large project that can be accomplished in a period of six months which equates to two semesters. The initial loading of the system with data takes place at the commissioning of the system. A complete schedule is as below. Period/TimeActivityDescription November 2011 Acquisition of use¬ful Resources. This involves collecting the useful facts from the ministry of Trade November 2011Databases Design Building individual databases, tables and individual record sets and loading with sample test data. December 2011 o January 2012Defining Record setsInvolves defining relations of data within various databases and means of accessing them February 2012Creating a Graphical User InterfaceInvolves creating user inter¬face that users of the system will use to search for information March 2012TestingInvolves testing the system with sample data and correcting any anomalies especially in the database design if any.

Project Budget

Particular squantity unit Price (Kshs)

Total Cost(Kshs)

Transport 5000 2Storage devices flash drive, CDs2 GB Flash Drive 2 Compact Disks 1,000 252,000 50 3Printing expenses1000 4Stationery2 A4 Books 2 pens 100 25200 50 5Computer Machine and software

Available but limited 6Internet costs 2000 7Airtime6000 TOTALKshs 16,300 Table 2) project budget

References

1. Ministry of Trade Strategic Plan 2008-2012.
2. Hawryszkiewycz, I. (1998), Introduction to System Analysis and Design, Prentice Hall, Australia.

Cash Transfer system is presently a popular discourse in poorness decrease. Originally designed as an intercession scheme under dearth and exigency conditions, hard currency transportation has now been applied as a wide spectrum instrument in poorness decrease including kids ‘s public assistance. Inspired by Sens ‘ Entitlement Approach, hard currency transportation is a demand side intercession aimed at stimulating demand for services through administering hard currency to the mark population. Cash transportations are a non-contributory grant such as income support, kid grants, Foster attention grants and scholarships. Focus of this paper is limited to whether such grants are conditional or non. Conditional Cash transportations have been used to advance instruction in Latin America. Disbursement of hard currency was made on status that school traveling kids in the family are enrolled or attend school or both. This attack seems to estrange instruction from other family demands and do it alone to kids. However, repressing the family factors that led to under demand for instruction by enforcing conditions might non be the best solution in bettering entree to instruction. An apprehension of how instruction can be promoted in the background of family demand forms and resource allotment determinations seems believable. The focal point is on the family for two grounds. First, Most kids live in families and families are an of import establishment in supplying kids with primary demands. In this position, family operation ( the extent to which all it needs are met ) is of import in run intoing kids ‘s demands. Second, the demands of families are by and large linked and complementary to each other, in which instruction is one. Therefore, run intoing kids ‘s primary demands such as wellness and instruction through hard currency transportations is most likely to be sustainably achieved through a family attack. This essay reviews the literature environing the usage of hard currency transportations in advancing orphans and vulnerable kids ( OVC ) instruction, while concentrating on how rural Zimbabwe families can be instrumental in guaranting sustainable demand for instruction.

Children and instruction in Zimbabwe

The demand for instruction in Zimbabwe has been greatly affected by the HIV/AIDS pandemic and intensifying poorness. In 2004, Catholic Relief Services estimated that about 30 % of kids were orphans

[ 1 ]

. AIDS related Orphan population is estimated to hold reached 1.1 million in 2010

[ 2 ]

. A big figure of orphans are populating in drawn-out households largely in rural countries. Bettering entree to instruction for orphans and other kids made vulnerable by poorness therefore requires a wider attack that besides caters for loss in support. The Basic Education Assistance Module ( BEAM ) revived in 2010 under the Ministry of Education Sports and Culture to supply educational subsidies towards OVC has an mean coverage of merely 7.8 % ( Mushunje and Mafico. 2010 ) . The net registration rate for primary school is approximates 90 % harmonizing to UNICEF statistics

[ 3 ]

. However, attending has been greatly affected by the intensifying economic crisis. With unemployment rate good above 80 % , instruction aid is needed.

Cash transportation and instruction

Cash transportation has been used in human development through advancing entree to wellness, nutrition and formal instruction particularly aiming vulnerable kids. Success narratives in Latin America have strengthened the thought that conditional hard currency transportation can be employed across Africa in advancing formal instruction for kids. Registration and attending were used as indexs for success. However, enrolment entirely is non sufficient in bettering instruction. Consistency in go toing school seems to be a comprehensive index for programme impact. Conditional hard currency transportation based programmes such as The Red de Proteccion Social Programme in Nicaragua resulted in an mean addition of 18 per centum points in registration and 23 per centum points in attending ( against a baseline of 70 % registration in the mark population ) between 2000 and 2003

[ 4 ]

. The Bolsa Familia Programme in Brazil has shown a lessening in school dropout and an addition in enrolment even though the sum of the hard currency transportation was less than that realised from child labor ( Chapman 2010 ) . The betterments in entree to instruction hold been attributed to handiness of hard currency for school fees and sometimes to worsen in child labor through increased household income.

Several hard currency transportation programmes aimed at increasing the demand for instruction have besides been carried out in Africa. Kenya ‘s first stage of Cash Transfer Programme was launched in 2004 in 3 territories with each family having about USD 6.50 per month ( Bryant 2009 ) . Absenteeism declined by 16 % during the first 9 months in Kalomo territory Zambia where unconditioned hard currency transportation was implemented ( GTZ 2005 )

[ 5 ]

. Very few surveies have been documented about the usage of hard currency transportation in advancing instruction in Zimbabwe. However, a correlativity between an addition in income and an addition in puting instruction has been established in other hard currency transportation undertakings. The 2006 Zimbabwe Emergency Cash Transfer Pilot Programme aimed at bettering nutrient security in 3 territories of Zimbabwe indicated that some part of the money distributed was used to purchase educational equipment such as books ( Roman 2010 ) .

Theoretical footing of hard currency transportations

Cash transportation is fundamentally based on the Entitlement Approach ( OXFAM 2006 ) . Sen ( 1981 ) used the entitlement attack to explicate the dearth that occurred in Bengal in 1943.According to Sen ( ibid ) , people did non decease because of deficiency nutrient but ‘lacked the ability [ … ] to command nutrient through the legal agencies available in the society ‘ , i.e. , entitlement failure ( ibid. :167 ) . They may besides hold failed to utilize this ability if it was present. Sen ( ibid. ) described two signifiers of entitlement failure, “ pull ” and “ response ” failures. Pull failures represents inability to demand, for illustration through pay loss in unemployment. Response failures represent inability to provide to run into demand, i.e. the inaccessibility of nutrient on the market. The hard currency transportation attack is fundamentally a demand -side intercession aimed at extenuating the pull failures. In other words, the attack assumes that kids are out of school because instruction is non adequately demanded due to miss of service fees. The entitlement attack consists of three related constructs ; the gift set, entitlement function, and the entitlement set.

The gift set is defined as resources owned by a individual ( legal ) both touchable and intangible for illustration land, knowledge/skill and labor power. It is these resources that either through exchange or production enables a individual to obtain other trade goods needed for endurance through agencies that are considered legal by the society in which 1 is portion of ( Osmani 1993 ) .

Entitlement mapping refers to the procedure of change overing 1s gift into agencies possible to obtain trade goods packages of one ‘s pick. Therefore, laborers ‘ sale their labor to obtain rewards for purchasing trade goods while husbandmans sells their green goods to acquire hard currency for exchange with other trade goods. Social security falls within this procedure.

Entitlement set ( trade good package ) , refers to the existent trade goods which people chose to hold for fulfilling their demands. The entitlement set besides includes goods and services obtained through public provisioning such as free instruction.

Several advantages have been identified by pro hard currency transportation assistance coders in nutrient security ( e.g. OXFAM 2003 ) . These include reduced response clip, flexibleness and expanded picks for donees and cost effectivity in term of absence of procurance costs. Using conditional hard currency transportation in instruction seems to fall short of some of the above advantages, family picks are really limited, and costs per donee are likely to lift due to supervising costs. Even when statements point out that conditioning improves effectiveness particularly when a specific group within the family such as kids are targeted, effectivity still rest on the health professionals ‘ pick to take part or honor the conditions. The undermentioned subdivision analyse family from the entitlement attack position.

Locating families within the Entitlement Approach Framework.

A ‘household ‘ fundamentally consists of people populating in the same home and have common agencies for endurance. A family might non be household but assorted household composed of members from more than one household. Cash transportations are a manner of giving families capacity to demand services. Families make picks or ‘map ‘ on the services depending on their demands. The procedure of entitlement function at the family degree determines whether instruction as a ingestion good will be portion of the entitlement set, unless conditions are imposed. In a state of affairs of really limited resources under poorness conditions, demands that are considered most of import are more likely to acquire attending foremost. This suggests a additive relationship among demands. Besides needs that complement each other tend to be located closer to each other in the relationship. Therefore, a closer appraisal of overall family demand form is of import before an effort to excite demand for instruction. Sing the fact that a family operation is indispensable for kids ‘s public assistance, a comprehensive bundle may be necessary to do such intercession sustainable.

Traditional microeconomic theoretical accounts assume that families consist of person who are a public-service corporation maximising ( Cornia and steward 1995 ) . The family make corporate determinations and income is allocated in the best manner to run into the demands of the family. A family is merely limited by the entire budget at its disposal ( Vermeulen 2002 ) . Under the public-service corporation theoretical account, even if the hard currency is disbursed to a family without any specific targeting, every member of the house is assured of a just portion from the corporate appropriation procedure. However, Individuals of course have different penchants or at least differ in precedences. When I was turning up at that place were infinite times when I would desire money to travel to a film house merely to be told that the few dollars left were for my male parents ‘ conveyance to work ( likely budgetary restraints ) , or that I would instead inquire for a new brace of school places ( precedence ) . Samuelson ( 1956 ) made an effort to explicate the inevitableness of single penchants and suggest that at least family members argue for their ain personal penchants and make a consensus to aggregate their public-service corporations. Becker ( 1974 ) unlike Samuelson, suggest the being of a benevolent family caput through which corporate public-service corporation is achieved.

On the other manus, the bargaining theoretical account assumes a bargaining procedure among family members. The ultimate allotment of resources depends on the bargaining power of each person or groups within the family ( Cornia and steward 1995 ) . In this theoretical account, kids are expected to dicker for demands like school fees and other rudimentss.

The above family theoretical accounts are an of import measure in understanding family ingestion forms. Concentrating on the rural Zimbabwe in a scenario of really limited resources, it is most likely that the demands ( including instruction ) would be prioritised in a superior order with the topmost needs having financess before those lower in rank. Assuming that kids will hold much dickering power particularly in an drawn-out household family might be an simplism. Demand for instruction is largely possible when it is considered a family demand and the budget license. The diminution in absenteeism rates in non-conditional hard currency transportations in Kalomo Zambia suggests that the demand for instruction might non needfully necessitate to be induced, but increased ingestion on other demands is positively correlated to ingestion on instruction.

Targeting Children within the family

Most kids exist in families, and have entree to basic demands such as nutrient, shelter, and instruction by virtuousness of being household members. Children who separate from a family might lose some basic demands such as shelter and nutrient. Children populating on the streets are a good illustration. Targeting kids in a manner that recognises this relationship is hence of import. This logically translate to the thought that a balance should be stuck among the viing demands within the family whether through public-service corporation maximising or dialogue. Targeting kids presents a challenge in poorness intercessions. If our position is that a family is necessary for kids ‘s endurance, we are most likely to accept that realization of kids ‘s entree to instruction is achieved when the family is working good ( i.e. affording most of its basic demands ) . On the other manus, if we hold the position that the family has failed to supply entree to basic demands for kids, we tend to estrange kids from the family and seek solutions that are limited to kids. Even if a plan is designed to references direct costs of instruction, the kids can merely go to school if the family attains some degrees of satisfaction on its other demands, for illustration, lower limit nutrient demands. It is hence of import to see the adequateness of the sum of hard currency transportation in intercessions.

Beneficiaries in Kalomo District in Zambia indicated that the size of the hard currency transportations given were non plenty to run into the basic family demands ( Wietler 2007 ) , neither USD 6.50 per month transportations in Kenya might be sufficient to convey sensible alteration in a family ‘s economic status. Regularity of income is besides of import. The success of the Bolsa Familia programme is partially attributed to dependability of regular income even though the transportations where less than incomes form child labor ( Chapman 2010 ) .

Other obstructions in aiming kids are deserving to see. During the choice of the mark population there are a scope of factors that might exclude/omit meriting families or kids to be donees. For illustration, deficiency of designation paperss or the clip interval between choices of donees. The choice of donees does non take topographic point every twenty-four hours for logistical grounds, while kids are invariably falling vulnerable from assorted grounds. Excessive coverage happens when people who do n’t run into the standards for inclusion benefits form an intercession. Cornea and Stewart ( 1995 ) working in the country of nutrient subsidies argued that the chance of inordinate coverage lessenings when most of the people in a population meets the standards for inclusion. Sing the figure of out of school kids populating below the poorness threshold in rural Zimbabwe, coders should non go much disquieted about mark preciseness. Otherwise the cost of supervising for conformity will go expensive and lead to an addition in costs per donee. In a survey of 15 Sub Saharan states, Kakwani and Son ( 2005 ) discovered that the Pro-Poor Policy Index differences were non important in conditions of perfect aiming and cosmopolitan targeting, particularly where degrees of poorness were really high.

Entree to instruction is non merely determined by the ability to run into direct costs of instruction. Other factors that need to be established through a situational analysis are of import before make up one’s minding whether hard currency transportations ( conditional or non-conditional ) provides the best solution or non. The perceptual experience held the family on instruction may play a function. For illustration, ingestion on instruction may depend on whether it is considered an investing or ingestion good ( Kakwani et. Al. 2006 ) . The impact of instruction proviso besides depends on the quality of instruction. Consequently, supply side needs attending in footings of instructor preparation, educational installations and equal equipment. Success of the Red de Proteccion Social Programme in Nicaragua is besides attributed to fillips received by instructors for each kid who attend school and half of the sum was used to secure school stuff ( Chapman 2006 ) .

Decision

Cash transportations primary aim is by and large to cut down poorness and exposure and besides to increase affordability of trade goods. This nonsubjective can be achieved rather easy by utilizing non conditional assortments of hard currency transportations. Some literatures suggest that conditional hard currency transportations are the most effectual in advancing kids ‘s human capital development. However, the justification of utilizing conditions on hard currency transportations is unfastened to debate and unfavorable judgment. Conditional hard currency transportations cut down picks for families and might non needfully reflect the pending demands people have. Even though conditional hard currency transportations can be introduced to hike weak demand in instruction, an apprehension of state of affairss taking to less than expected ingestion on instruction is required. This entails apprehension of local family economic and societal functionalities. Evidence of an addition in investing in instruction under non-conditional hard currency transportation suggests that instruction is a family demand. Therefore, advancing kids ‘s instruction within the family model is most likely to be sustainable. All the same, household ingestion degrees on each demand tend to be related, complemented, or may be partly influenced by ingestion of another. Policy shapers besides need to see a web of grounds why families sometimes fail to adequately demand instruction in rural Zimbabwe. Considerations must be taken to see if hard currency transportation in its assorted signifiers can be used as a primary instrument or as a complement to other more relevant schemes particularly against a background of intensifying educational crisis.

Course: International Political Economy [GT27M/ GOVT 2049] ID Number: 620033630 Name: Matthew Thomas Lecturer: Sheldon Barnes Date of Submission: 7/9/2012 Question I: What are in your view the main principles governing international trade policy in the context of the WTO and which would be the main provisions in which you find these principles reflected in the WTO agreements? Please elaborate

Formed in 1995 to replace its predecessor the General Agreement on Tariffs and Trade (GATT), under the Treaty of Marrakech, The World Trade Organization (WTO) is the only international organization that deals and treats with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. The goal of the WTO is to aid and facilitate producers of goods and services, exporters, and importers conduct their business.

At its core are the WTO agreements, negotiated and signed by a majority of the world’s trading nations and approved within their respective parliaments. These principles aid in the efficient government of international trade policy ensuring that all signatories adhere to the contract they are bind to, by this governments are now required to create national trade policies transparent by notifying the WTO about present laws in actions and measures implemented, and through regular reports by the secretariat on countries’ trade policies.

The WTO agreements cover goods, services and intellectual property. They explain the principles of liberalisation, as well as the allowed exceptions. They include individual countries’ commitments to lower customs tariffs and other trade barriers, and to open and maintain open services markets. The agreements set procedures for settling disputes; prescribe special treatment for developing countries.

The agreements of the WTO are detailed and intricate as they are legal texts that facilitate a wide range of activities such as: agriculture, clothing and textiles, banking and finance, telecommunications, government purchases, industrial standards and product safety, food sanitation regulations, intellectual property, among others. A number of simple, fundamental principles run throughout all of these documents. These principles exist as the foundation of the international multilateral trading system.

Given that the core of the WTO, especially leading out of the Doha Round of Trade Negotiations [2001- present], is to focus and adjust the concerns that are faced by developing nations; the main principles within the context of the WTO that validate international trade policy are: i) Trade without discrimination ii) Freer Trade iii) Promotion of fair competition v) Development and economic reform. These principles of international trade within the legislation of the WTO can be reflected in trade agreements drafted by the organisation.

The principle of “Trade without discrimination” has two key underlying principles: Most Favoured Nation [MFN] and National Treatment [NT]. The MFN, in essence is simply treating other people equally. As legislated by WTO agreements, countries are prohibited from discrimination between their trading partners. Wherein one country is restricted from granting a particular country a special favour e. g. such as a lower customs duty rate for one of their products and this favour is not extended to all the other members of the WTO. This principle is known as Most Favoured Nation (MFN) treatment.

The first article of the General Agreement on Tariffs and Trade (GATT) [1947], which is the governing legislation for the trade in goods, this article speaks to prohibition of member nations to discriminate between “like” products originating from other member nations. In Article I of the GATT it states “any advantage, favour, privilege or immunity granted by any contracting party to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product originating in or destined for the territories of all other contracting parties. MFN is also a focus in Article II of General Agreement on Trade in Services (GATS), where it states “each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country. ” Likewise Article IV on the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)  which states “With regard to the protection of intellectual property, any advantage, favour, privilege or mmunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members. ” The agreements in essence cover all three main areas of trade handled by the WTO and gives guidelines as how to WTO member nations execute their trade policies. Though the essence of the MFN treatment is to permit some sense of equality among WTO signatories exceptions are permitted. For example, countries can set up a free trade agreement that applies only to goods traded within the group —   discriminating against goods from outside.

Or they can give developing countries special access to their markets. Or a country can raise barriers against products that are considered to be traded unfairly from specific countries. And in services, countries are allowed, in limited circumstances, to discriminate. Though these exceptions exist, they are permitted under highly strict conditions. In essence, the MFN policy acts a facilitator to ensure that every time a country lowers a trade barrier or opens up a market, it has to do so for the same goods or services from all its trading partners – regardless of their economic development.

National Treatment eliminates discrimination between the products of national and foreign services or nationals, in this sense the protocol for national products are expected to be reciprocated to that of foreign entities. Once foreign goods enter a local market, the expectation exists that they should be treated equally as the locally-produced goods. This expectation extends pass produce; it should apply to foreign and domestic services, and also foreign and local trademarks, copyrights and patents.

Given that NT covers various areas of trade it is highlighted in three main WTO agreements. In Article III of the GATT it is stated that “The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favourable than that accorded to like products of national origin in respect of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase, transportation, distribution or use. Article XVII of GATS states that “…each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like services and service suppliers. ” Article III of TRIPS, speaks to the issue of Intellectual Property [IP] by stating that “Each Member shall ccord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection (3) of intellectual property…” The three treaties highlights the areas of trade the WTO governs, from that of goods exchange, services exchange and the importance of ensuring the proper utilisation of Intellectual Property rights such as copyrighting and patenting. According to the WTO “National treatment only applies once a product, service or item of intellectual property has entered the market.

Therefore, charging customs duty on an import is not a violation of national treatment even if locally-produced products are not charged an equivalent tax. ” In conclusion, the “Trade without Discrimination” principle with its two underlying principles of Most Favoured Nation [MFN] and National Treatment [NT] policies The National Treatment principle constitute the two pillars of the non-discrimination principle that is widely seen as the foundation of the GATT/WTO multilateral trading regime. The concept of “Freer Trade” assists in the decrease of trade barriers which acts as an excellent facilitator for encouraging trade.

Such barriers include: customs duties (or tariffs) and measures such as import bans or quotas that restrict quantities selectively; it can also p to include the decrease of other administrative barriers such as red tape- including policies of exchange rate. The WTO’s global system lowers trade barriers by means of negotiation and applies the principle of non-discrimination [MFN and NT]. This brings about a result of a reduction in the costs of production, as imports used in production are far cheaper; a reduction in the prices of finished goods and services, which in essence can contribute to a lower cost of living.

Since the GATT’s creation in 1947, there have been eight rounds of trade negotiations. The ninth round, under the Doha Development Agenda, is still in negotiations for the past eleven years. The initial focus was geared towards lowering tariffs on imported goods; however the 1980s, the negotiations had expanded to cover non-tariff barriers on goods, with the inclusion of areas such as services and intellectual property. As a result of the negotiations, the tariffs on industrial goods declined to less than 4%, during the mid-1990s. Opening markets can be beneficial, but it also requires adjustment.

The WTO agreements allow countries to introduce changes gradually, through “progressive liberalization”. Article XIX of the GATS states “…with a view to achieving a progressively higher level of liberalization. Such negotiations shall be directed to the reduction or elimination of the adverse effects on trade in services of measures as a means of providing effective market access. This process shall take place with a view to promoting the interests of all participants on a mutually advantageous basis and to securing an overall balance of rights and obligations.

The process of liberalization shall take place with due respect for national policy objectives and the level of development of individual Members, both overall and in individual sectors. There shall be appropriate flexibility for individual developing country Members for opening fewer sectors, liberalizing fewer types of transactions, progressively extending market access in line with their development situation and, when making access to their markets available to foreign service suppliers, attaching to such access conditions aimed at achieving the objectives referred to in Article IV. The article clearly addresses developing countries which are usually given longer to fulfil their obligations. The principle of “Promoting fair competition” portrays The WTO as an instrument of not just extending mechanisms of free trade but is also a system of rules dedicated to open, fair and undistorted competition. By this, the system of the WTO permits tariffs and, in limited circumstances, other forms of protection. More accurately, it is based on the rules on non-discrimination [MFN and NT] which are designed to secure fair conditions of trade.

So too are those on dumping (exporting at below cost to gain market share) and subsidies. The issues are complex, and the rules try to establish what is fair or unfair, and how governments can respond, in particular by charging additional import duties calculated to compensate for damage caused by unfair trade. By removing some market barriers The WTO has promoted competition in the global trading market extending it beyond the borders of WTO membership; the trading principles set by the WTO are meant to allow fair and undisturbed market competition.

The WTO extends and clarifies previous GATT rules that laid down the basis on which governments could impose compensating duties on two forms of “unfair” competition: dumping and subsidies. WTO agreements are geared towards the support and maintenance of fair competition in the sectors of: agriculture, intellectual property, services. The WTO Agreement on agriculture is designed to provide increased fairness n farm trade, the agreement on intellectual property will improve conditions of competition where ideas and inventions are involved, and another will do the same thing for trade in services. The construct of the WTO contributes to development and as it encourages development and economic reform geared towards to the developmental process of developing nations. Given that notion, developing countries require an urgent sense of flexibility to effectively implement the agreements drafted by the organisation.

The current agreements inherit the earlier provisions of GATT that allow for special assistance and trade concessions for developing countries. The WTO cannot claim to make all countries equal however it aids in the reduction of some inequalities; by doing this it gives smaller countries more voice, and at the same time freeing the major powers from the complexity of having to negotiate trade agreements with each of their numerous trading partners.

A majority of over three quarters of the WTO membership comprise of developing countries and countries in transition to market economies. The 1986-1994 Uruguay Round saw over 60 of these countries implementing trade liberalisation programmes unconventionally. At the same time, developing countries and transition economies were much more active and influential in the Uruguay Round negotiations than in any previous round, this activeness has also transpired to the current Doha Development Agenda.

Developing countries were prepared to take on most of the obligations that are required of developed countries by the end of the Uruguay Round. The agreements did grant developing nations transition periods to adjust themselves to the more stringent and arduous provisions of the WTO. The GATT has a special section on Trade and Development which speaks to provisions on the concept of non-reciprocity in trade negotiations between developed and developing countries. Both GATT and the GATS allow developing countries some measure of preferential treatment.

A ministerial decision  adopted at the end of the Uruguay Round says more developed countries should accelerate the implementation of market access commitments on goods exported by the least-developed countries, while increasing technical assistance for them. More recently, developed countries have started to allow duty-free and quota-free imports for almost all products from least-developed countries. The current Doha Development Agenda includes developing countries’ concerns about the difficulties they face in implementing the Uruguay Round agreements. ——————————————– 1 ]. The Marrakech Agreement developed out of the General Agreement on Tariffs and Trade, which it includes; but it supplemented it with several other agreements, on such issues as trade in services, sanitary and phytosanitary (plant health) measures, trade-related aspects of intellectual property and technical barriers to trade. It also established a new, more efficient and legally binding means of dispute resolution. [ 2 ]. The Secretariat has a particular responsibility to provide technical support to developing countries, and especially the least-developed countries. 3 ]. As a result of the Uruguay Round negotiations the treaty was created to extend the multilateral trading system to service sector. [ 4 ]. (NAFTA)North American Free Trade Agreement is an example of one of the most successful trade agreements in history; it has contributed to significant increases in agricultural trade and investment between the United States, Canada and Mexico and has benefited farmers, ranchers and consumers throughout North America. The Mexican-Canadian agreement eliminated most tariffs either immediately or over 5, 10, or 15 years. 5 ]. Page 248 the proliferation of rules and regulations prescribing the conduct of decision making in bureaucratic affairs (Politics Economic Welfare) [ 6 ]. The removal or reduction of restrictions or barriers on the free exchange of goods between nations. This includes the removal or reduction of both tariff (duties and surcharges) and non-tariff obstacles (like licensing rules, quotas and other requirements). The easing or eradication of these restrictions is often referred to as promoting “free trade. ” [ 7 ].

GATT (Article VI) allows countries to take action against dumping. The Anti-Dumping Agreement clarifies and expands Article VI, and the two operate together. They allow countries to act in a way that would normally break the GATT principles of binding a tariff and not discriminating between trading partners — typically anti-dumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the “normal value” or to remove the injury to domestic industry in the importing country. 8 ]. The WTO Agreement on Subsidies and Countervailing Measures disciplines the use of subsidies, and it regulates the actions countries can take to counter the effects of subsidies. Under the agreement, a country can use the WTO’s dispute-settlement procedure to seek the withdrawal of the subsidy or the removal of its adverse effects. Or the country can launch its own investigation and ultimately charge extra duty (“countervailing duty”) on subsidized imports that are found to be hurting domestic producers. 9 ]. This is a procedure when developed countries grant trade concessions to developing countries they should not expect the developing countries to make matching offers in return. [ 10 ]. The URUGUAY ROUND AGREEMENT: “Decision on Measures Concerning the Possible Negative Effects of the Reform Programme on Least-Developed and Net Food-Importing Developing Countries”

Note: This textbook case was prepared “prior” to the Egyptian revolution that occurred early in 2011. The questions should be answered based on the situation at the period of time considered in the question.

Question 1: How would you describe the economic policy that Egypt implemented during 2004-2008?

The new economic policy was one that promoted trade and put less regulation on Egyptian businesses.

1a. Do you think this policy helped to boost Egypt’s growth rate? Why or why not?

I absolutely believe this policy helped boost their growth rate. Virtually all of the statistics used to measure an economy showed that they were growing rapidly during this period. It is only reasonable to assume their policy, which promoted trade and increased domestic business opportunities would have had a large hand in this.

Question 2: How vulnerable was the Egyptian economy to a slowdown in global economic activity such as that which occurred in 2009?

They were very vulnerable to economic slowdown due to the fact that much of the revenue that promoted their growth was coming from foreign outlets such as investments, tourism, and Egyptian expatriate workers. If these foreign countries experienced a slowdown in economic activity it would, and did, have a great affect on the Egyptian economy.

2a. What would the countries objectives be to reduce this vulnerability?

To reduce this vulnerability, I believe they should focus on having strong domestic areas that don’t have as much dependence on foreign companies.

Question 3: What were some of the risks in Egypt’s current political system may of led to the revolution of 2011?

The main risk in Egypt’s political system is that it went against the norms of most industrialized countries. As people gain standing financially, they begin to expect better treatment and expect their voices to be heard more.

3a. What is the best case scenario going forward, what is the worst case scenario?

The best case scenario is that they evolve into a more democratic country and give their citizen more rights. Worst case, they once again fall to an autocratic leader and rescind their economic policy changes.

Question 4: Post revolution; is Egypt an attractive market for international business?

I think Egypt is now a very attractive market for international business. Egyptians must feel more empowered than they have in a long time, this attitude will be perfect for expanding their economy and reaching new areas of business that they couldn’t before.

4a. What advice would you give to a multinational enterprise considering investment in Egypt?

I would advise a multinational enterprise to invest in companies’ area that promoted growth in the Egyptian economy to help them emerge as a strong member of the global economy.

Balance of payments – accounting statement of the international transactions of one nation over a specific period of time (transactions between US residents and residents of all other countries during that year). Divided in different components:current Account – purchases and sales of goods and serviceableness Account – capital authoritativeness’s Account – changes in official reserves Debit entry – purchase of domestic goods, services, or assets, or a decline in liabilities to foreigners. Credit Entry – sale of debit entry.

Double entry book keeping ensures that debits = credits (sum of all transactions – zero). In the absence of official reserve transactions, financial account surplus must offset the current account deficit, vice versa. US = running a large current account deficit (imports > exports) Reduce: domestic savings rise, private investment declines, gobo deficit reduced Focus: unfair trading practices + or on the high value of the dollar Domestic spending balance = private savings investment balance – gobo budget deficit National Income = Consumption + Civilizations Spending = Consumption + Environmentalist Income – National.

Spending = Savings – Investment I-curve theory, a country’s trade deficit worsens Just after its currency depreciates because price effects will dominate the effect on volume of imports in the short run. Protectionism-that is, the imposition of tariffs, quotas, or other forms of restraint against foreign imports. A quota specifies the quantity of particular products that can be imported to a country, typically an amount that is much less than the amount currently being imported.

Foreign Exchange Market Balance of Payments and International Economic

Linkages By pompom’s facilitate international trade and investment. Two Tiers – interbrain market (major banks trade with each other) & retail market (banks deal with their commercial customers). Spot market – currencies are traded for settlement within two business days after the transaction has been concluded. Forward market – contracts are made to buy or sell currencies for future delivery. The importer is offsetting a short position in pounds by going long in the forward market?that is, by buying pounds for future delivery. Forward Premium or Discount on Foreign Currency = (Forward rate – Spot rate / Spot rate) x 360 / Forward contract number of days

The major participants in the forward market are categorized as arbitrageurs, traders, hedgers, and speculators. This forward differential is known as the swap rate. Most currencies are quoted against the dollar, the exchange rate between two nodular currencies, known as a cross rate, must be calculated on the basis of their direct quotes against the dollar. Percent Spread = Ask Price – Bid Price / Ask Price x 100 A different type of credit risk is settlement risk, also known as Harshest risk. This risk arises because of the way foreign currency transactions are settled (banks may be in different time zones, there may be a delay).