RUSSIA

The popularity of the impact of bilateral trade derives from its multifunctional benefits. Gains from trade can be divided into three categories: 1) direct advantages - instead of making a particular good, an economy can obtain more by producing another product and trading; 2) indirect advantages - trade promotes competition and is a conduit for foreign technology; 3) intellectual – trade contributes to the arrival of democracy . Being aware of the benefits, liberals promote trade liberalization, minimum state intervention in the market and the reduction of obstacles to trade.

Russia’s economic development today largely depends on bilateral trade with its neighbor countries from Central and Eastern Europe (CEE) with which Russia has always had very close economic relations. The reasons for the CEE’s contribution to Russia’s growth are twofold. The first contribution derives from the fact that the CEE countries are large recipients of energy sources that Russia’s economy produces. Secondly, because of improved access to the CEE countries' markets after the European Union Enlargement, Russia's trade may expand, and its economic growth rise. Whereas the first contribution might have only a short-term impact on Russia’s economy, the second one may have an effect on the development of Russia’s long-term sustainable growth.

Russia’s bid to join the WTO was approved on 16 December 2011 at long last. This event marked the end of some of the longets negociations in WTO history, with Russia making its initial decision to join the General Agreement on Tariffs and Trade — the precursor to the WTO — in 1993.
Below is a video when finally Russia joined the WTO.


http://www.youtube.com/watch?v=r0kF4Ozetl8
 

On the one hand, sceptics about Russia’s involvement believe the decline in tariff protection will considerably worsen the plight of many Russian industries and be particularly detrimental to Russia’s light industry and agriculture.

Russia’s forestry and car industries are likely to be especially impacted. As WTO membership requires maximum duties on unprocessed timber to be reduced from the current 25 per cent to 15 per cent, the forestry industry will find it increasingly hard to compete. Products such as paper, for example, will be cheaper to import than to produce until the industry becomes more efficient. And from 2012, Russia’s car industry will no longer be able to depend on state subsidies or the protection it receives from duties imposed on imported cars. Similarly, foreign investors will have less incentive to relocate production facilities to Russia in exchange for customs exemptions.

There was a relatively large scale immigration of Jews from the 1930s through the1960s into Palestine/Israel that was primarily exogenous to the wages in the destination and was large relative to the destination economy. These migrants were refugees and displaced persons, whose choice of destination was motivated by religious and ideological factors, as well as constraints on alternative destinations. During the 1930s there was a large Jewish refugee flow with professional and other high levels of skill from Germany and central Europe into a capital-poor economy. The result was a decline in the relative wages of skilled workers, a decline in the rate of return from skill, and a very small earnings inequality in Russia.

Foreign direct investment in the Russian economy increased by 39 percent year on year in January-June 2011, to over $27 billion

The Kremlin set up the Russian Direct Investment Fund to co-finance international investment and in October won $1 billion in backing from China’s sovereign wealth fund, the first foreign commitment to the private-equity vehicle. The government expects inflows to reach between $60 billion and $70 billion soon, Prime Minister Vladimir Putin  said.

The financial industry received the largest amount of investments in 2011, attracting $86.9 billion, followed by manufacturing and mining. Cyprus was the largest foreign investor in the period, followed by the Netherlands, Luxembourg and Germany.

Mercosur

Mercosur is an economic and political agreement among Argentina, Brazil, Paraguay and Uruguay. Founded in 1991. Its purpose is to promote free trade and the fluid movement of goods, people, and currency. The official languages are Portuguese, Guarani, and Spanish. It has been updated, amended, and changed many times since. It is now a full customs union.
The founding of the Mercosur Parliament was agreed at the December 2004 presidential summit. It should have 18 representatives from each country by 2010, regardless of population.
Venezuela's economy and government operating expenses depends mainly on oil. Oil exports make up one third of their GDP and almost eighty percent of their exports. Another Venezuelan economic sector is their service sector which makes up roughly sixteen percent of their economy. Mercosur's main goal is to construct a common market place and customs union between the countries that participate in this membership. Mercosur's market includes the movement of goods freely, and elimination of customs tariffs between the involved regions. Venezuela has a strong economy; however they could use an economic increase. The purpose of joining Mercosur is to promote business within the country.
There are many benefits for many countries to become membership of Mercosur. For example Venezuela as a country becoming members of Mercosur has many benefits including Increased Market Access. The country has and will continue to connect to consumers through this trade group. Since the market access has increased this in return has caused increased opportunity for Venezuelan businesses. The countries private and state sectors are allowed to trade with other countries in their region. Which has also caused exports and GDP to increase, this will help to build their countries self economical worth. Because of the improvement in their economic structure it opens other avenues for international investments on both sectors. Venezuela can invest in other international markets inside their region, as well as, countries located in Mercosur region may invest in Venezuela. This continuous business cycle will help to strengthen countries within Mercosur.
In this chart, Argentina and Brazil, account for 90 percent of Mercosur's collective gross domestic product (GDP).

There are also some disadvantages to Venezuela becoming members of Mercosur. Numerous members of this bloc believe that the rules and agreements drawn up by Mercosur are somewhat one sided. Another drawback would consist of trade diversion. Since Venezuela is now part of Mercosur they may trade with other countries more so than the countries they were trading with before. This can cause the balance to shift and may not be good for Venezuela in the long scheme of things. Another concern would be the compromise of intellectual property rights. With the export of Venezuelan electronics this could allow countries in side the region to copy or use some of the ideas from Venezuelan products.
In conclusion, Venezuela has many advantages and disadvantages to joining Mercosur. The country as well as a company can improve sales, improve capital, and improve overall investments. If approached carefully, this membership can create a healthy business cycle. The advantages can out weigh the disadvantages in a company prospective if strategic planning is implemented before hand. It is vital to understand your market place prior to undergoing any changes in operations.

Chapter 7 Blog

International trade between nations is necessary, because the scare resources are distributed unevenly between different countries and thus some countries are better producing some products than other. Developing countries which trade successfully tend to be those which have made the most progress in alleviating poverty and raising living standards.
Those countries  have become much more important in world trade, they now account for one-third of world trade, up from about a quarter in the early 1970s. Many developing countries have substantially increased their exports of manufactures and services relative to traditional commodity exports: manufactures have risen to 80 percent of developing country exports. Moreover, trade between developing countries has grown rapidly, with 40 percent of their exports now going to other developing countries.
Some Asian countries have become successful because they chose to participate in global trade, helping them to attract the bulk of foreign direct investment in developing countries. This is true of China and India since they embraced trade liberalization and other market-oriented reforms, and also of higher-income countries in Asia, like Korea and Singapore that were themselves poor up to the 1970s.
Policies that make an economy open to trade and investment with the rest of the world are needed for sustained economic growth. The evidence on this is clear. No country in recent decades has achieved economic success, in terms of substantial increases in living standards for its people, without being open to the rest of the world. In contrast, trade opening  has been an important element in the economic success of East Asia, where the average import tariff has fallen from 30 percent to 10 percent over the past 20 years.
Opening up their economies to the global economy has been essential in enabling many developing countries to develop competitive advantages in the manufacture of certain products.
The Organization for Economic Cooperation and Development founded in 1961. Is one of the organization that helps developing nations. Its main role is to stimulate economic progress and world trade.
The OECD has 34 countries which are committed to democracy and the market economy. Their objective is to provide a setting to compare policy experiences, try to find solutions to common problems, put into practice good policies, and coordinate domestic and international policies. The OECD cooperates with businesses, trade unions and other representatives of civil society.
The OECD promotes policies designed to develop the economic process and improve the trade between the members as well as the nonmembers countries. It contributes to the expansion of world trade on a multilateral, nondiscriminatory basis.
OECD’s statistical annual that provides detailed statistics on population, labour force, employment and unemployment, broken down by sex, as well as unemployment duration, employment status, employment by sector of activity and  part-time employment. It also contains participation and unemployment rates by sex and detailed age groups as well as comparative tables for the main components of the labour force. Data are available for each OECD member country and for OECD Total, Euro area and EU15. The time series presented in the publication cover 20 years for most countries. It also provides information on the sources and definitions used by member countries in the compilation of those statistics.
  
Public spending % of GDP

				49 131	2 956	5.5

China- US trade war

The President Barack Obama approved raising the tariff  tax on imported tires from China, in order to slow the growth of United States imports of Chinese-made tires. In the past, it  was a small tariff of 4%. However, the American president  imposed an additional tariff of 35 % for the first year, 30 % for the second year and 25 % for the third year.

Unions blame the growth of Chinese tires imports for the loss of thousands of American jobs. More than 5,000 tire workers have lost jobs since 2004, Chinese tires overwhelmed the US market and hurt profits for American companies.

China accused the US of protectionism which is forbidden by the World Trade Organization. China announced it would investigate complaints that American of chicken products mainly chicken feet benefit from government subsidies or are being dumped in China, which means being sold in China at below market prices.

As a result of that the tariffs are expected to raise pricing of all kinds of tires because there will be fewer cheap competitors.

American Companies will be under less pressure to lower prices since their not a rude competition. These companies have also been cutting production and as a result of that there will be fewer tires for sale. 

China is not stealing US jobs or engaging in unfair trade practices to undercut US economic might and exports its way to global power. In fact, most of Chinese exports to the United States are produced by firms owned by foreign companies, many of them American. These firms have moved overseas in response to competitive pressures to lower production costs and thereby offer better prices to consumers and higher returns to shareholders.

Trade barriers

Unintentional trade barriers can be created in different ways. Some national regulations, hight standards and procedures can lead to intentional trade barriers to the countries that are interested in exporting their products overseas.

Recently, piracy has become a significant barriers for trade in Indian Ocean, which provides major sea routes connecting the Middle East, Africa, and East Asia with Europe and the Americas. It carries a particularly heavy traffic of petroleum and petroleum products from the oil fields of the Persian Gulf. An estimated 40% of the world's offshore oil production comes from the Indian Ocean. 16,000 ships pass through the Gulf of Aden every year on their way to the Suez Canal in Egypt, transporting Asian goods. Due to the relatively high traffic of petroleum tankers and goods, piracy off the Somali coast has been rising. This has been a threat to international shipping since the second phase of the Somali Civil War in 2006.

Piracy in Somalia has substantial international trade implications. Ships traveling through the Gulf of Aden have to bear the high cost of insurance, which has increased dramatically in the past few years. Companies that are not able to pay the insurance, have to take longer routes that take several weeks to reach Europe and North America and cost more in fuel.

The United States war on terror has become a real barrier to trade for US.  It caused delays on imported shipments. This security measure adds an average of two hours to each ship's arrival. The same process occurred to cargo planes and trucks entering the country. This kind of security has become a trade barrier that the United States created unwillingly. The associated costs that come with these security process have become the norm, and many other nations are actually adapting some of these systems in their own nation.

Globalization Drives Changes for US Automakers

Over the past few years, the American car companies lost millions of dollars. General Motors, Ford and Chrysler can not control the increase of the health care costs which affect negatively their competitive advantages, because they increase the price of the American cars and thus, decrease the comparative advantages.

I believe that the car companies should continue to pay the pension and health care costs for workers and retirees for many reasons. First, they have to follow the law of the health-care in United States. Second, because the Big Three had benefited from the bailout provided by the administration of the president George Bush and the president Barack Obama. The main reason of that bailout was to help the American workers to keep their jobs and their benefits package. 

It will be difficult for the Big Three to compete with other countries who offer national health-care. Most of these countries do not have the same wages and health care cost. For example, the hourly wages of workers at Toyota averaged is $24 while it is $30 for workers at the Big Three. American car companies can never compete with Japanese cars because there is a huge difference in the price and also because the Japanese cars are widely viewed as the most reliable and efficient cars in the world.

I think that the American auto industry should move to other producing countries with cheaper labor costs and lower operations costs. It’s important to eliminating domestic auto production because cars can be safely outsourced since they aren’t vital to the American national defense.   

It is true that many workers will lose their jobs if the Big Three outsourced their production. However, that will push other American industries to invest in new products and new technologies with an interesting comparative advantages.