Text | Podcasts | Questions | Requirements | Schedule | Expectations | Accommodations | Contacts | Readings |
PURPOSE: | The aim of this course is to teach you a lot about the economics -- and a little about the institutions -- of international trade and trade policy. The course is companion to SPP/Econ 542, International Finance Policy, which deals with international macroeconomic topics such as the balance of trade and balance of payments, determination of exchange rates, and international macroeconomic policies. Each course will also include the bare essentials of the other course so that if you take only one of them, you won't be lost in the world economy.
The course is mainly about trade policy. You will learn what trade policies are, how they are used by the United States and other countries, and how their use is restricted by international agreements. More importantly you will learn how to use economic modeling to understand the effects of trade policies and to quantify these effects. Along the way you will also learn about the institutions of the world economy, especially those that have to do with trade. And you will learn a little bit about the economic theories of why nations trade, and why they gain from trade.
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Prerequisite: | PubPol/Econ 555 or equivalent course in intermediate microeconomics |
Organization: | The course meets twice a week, Tuesdays ad Thursdays, 8:30-10:00 AM, in room 1220 Weill. |
Jackson, John H., The World Trading System: Law and Policy of International Economic Relations, Second Edition, MIT Press, 1997, isbn #0-262-60027-7.
NOTE on the Krugman, Obstfeld, Melitz text:
The most recent edition, the 10th, came out in 2015. Unlike previous editions, this is in three forms: one that combines international trade and finance like previous editions (which I ordered for you, but the publisher did not send me); a second that covers only trade (that they did), and a third that covers only international finance. If you intend to buy this new edition, you might want to choose based on whether you plan to take PubPol 542, International Financial Policy, at some point, since it will likely use the same book and you'll save money by buying the combined text rather than the two separate ones. However, 542 is not being offered this year. Alternatively, you might want to buy a used copy of the 9th edition from 2012, or even an earlier one. Coverage should be roughly comparable.
I provide chapter and page numbers for the trade-only version of the 10th edition and for the 9th edition. If you have the combined 10th edition, I suspect that the chapters and page numbers will be very similar to the 9th edition.
NOTE on the Jackson text:
There will also be a number of additional readings that are required. All are available under Files/Resources/Readings on Canvas. Most of the readings are also available free to the public on the web, through links included on this syllabus. A few readings are available through subscription sites, including ones subscribed to by U of M (e.g., JSTOR, Proquest). And a few are available only on Canvas.
Because of the speed with which issues evolve, readings selected in advance can never cover all of the latest developments. We will therefore spend some time each week discussing recent news related to trade and trade policy. You should follow current issues of international trade policy by reading daily periodicals such as the Wall Street Journal, New York Times, or Financial Times or weekly publications such as Business Week, or The Economist. Student subscriptions to these publications are available at reduced prices. I also post links to relevant news items on my personal website. We will devote some time each week to discussing the news.
PODCASTS
In the last year, the Peterson Institute for International Economics" has provided weekly podcasts, Trade Talks, most of them featuring Soumaya Keynes of The Economist and PIIE scholar Chad Bown, discussing topics of international trade policy. I have included links to a number of them at appropriate points in the syllabus marked Optional. I have not listened to all of them myself yet, but I've heard enough to know that they are valuable, if you can take the time to listen to them.
REQUIREMENTS
Requirements for the course consist of a series of problem sets that will not be graded, three short papers that will be handed in during the term and graded, and two exams. The weights on each of these requirements, as well as class participation, in determining your grade will be as follows:
Problem Sets | 0%
Class participation | 10%
| Papers | 30%
| Exam #1 | 30%
| Exam #2 | 30%
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Paper #1 | Tuesday, October 8 | 8:30 AM | ||
Exam #1 | Thursday, November 1 | in class | ||
Paper #2 | Tuesday, November 20 | 8:30 AM | ||
Paper #3 | Tuesday, December 11 | 8:30 AM | ||
Exam #2: | Tuesday, December 18 | 8:00-10:00 AM
| Note: Final is third-to-last day of exams
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WRITING ASSISTANCE
Your papers will be graded on both content and presentation, which means you should take full advantage of the Ford School resources for helping you with your writing. See http://fordschool.umich.edu/writing-center/ for more information, including links to the websites for signing up for advising appointments. |
EXPECTATIONS AND ACCOMMODATIONS
Please see http://fordschool.umich.edu/academics/expectations for the Ford School's policies regarding the following, all of which will be followed in this course:
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WHERE AND WHEN TO FIND ME
Alan Deardorff: | |||
Office: | Weill Hall, Room 3314 | ||
Phone: | 764-6817 | ||
Office Hours: | Mon 10-11 AM
Thu 2:30-3:30 PM | ||
E-mail: | alandear@umich.edu | ||
Feel free to e-mail me with questions or to request a meeting outside of my office hours. Also, if my door is open, ask if I have time to meet with you and I probably will. | |||
Course Home Page: | |||
http://www-personal.umich.edu/~alandear/courses/541/541.html |
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0. |
Introduction to the Course (Sep 4)
No readings for today. For all subsequent classes, you should read everything assigned before the class meets. | I've listed the numbers of pages for each reading and for each topic, so plan accordingly.
Optional:
| Kudlow, "Don't blame Trump' for trade fights" YouTube (2:14) Oliver, "Trade" YouTube (21:13) I. |
Overview of the International Economy
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A.1. |
The State of Play in International Trade and Trade Policy (Sep 6) [83 pp]
Questions
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KOM, Chs. 1, 2 (any edition) [21 pp]
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WTO:
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Porter, "Trump's Trade Endgame Could Be the Undoing of Global Rules" |
Canvas.
[5 pp]
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Schlesinger, "How China Swallowed the WTO" |
Canvas.
[12 pp]
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Economist, "How to Rescue the WTO" | Canvas. [12 pp]
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FTAs:
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Pop & Peker, "EU Looks to Champion Free Trade" |
Canvas.
[2 pp]
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Vieira, "Canada Pursues Trade With Asia" |
Canvas.
[2 pp]
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Londoño and Rich, "U.S. Allies Sign Sweeping Trade Deal" |
Canvas. [7 pp]
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Economist, "Forty-four African countries sign a free-trade deal" |
Canvas. [3 pp]
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Harding et al., "China, Japan and South Korea draw closer on trade" |
Canvas. [2 pp]
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Peker, "EU Pursues Trade Talks with Australia" |
Canvas. [2 pp]
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Legorano, "Bring Down EU-Canada Free Trade Deal" |
Canvas. [3 pp]
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Jun, "Trump's 'Great Deal' With South Korea" |
Canvas. [3 pp]
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Lewis et al., "Japan and EU sign trade deal" |
Canvas. [3 pp]
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Swanson, "Nearing Nafta Compromise" |
Canvas. [6 pp]
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A.2. |
The State of Play in International Trade and Trade Policy, continued (Sep 11) [88 pp]
Questions
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Brexit:
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Wheeler and Hunt, "Brexit: All you need to know 2016" |
Canvas [21 pp]
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Economist, "Dangerous delusion of no-deal Brexit" |
Canvas [5 pp]
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Optional:
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Hunt and Wheeler, "Brexit: All you need to know 2018" |
Online
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Trade Talks, "Brexit Two Years On" | Podcast [23:27 minutes]
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Trade War:
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Bown & Kolb, "Trade War Timeline" |
Online. [8 pp]
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Safeguards:
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Schlesinger & Ailworth, "U.S. Imposes New Tariffs" |
Canvas. [4 pp]
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Optional:
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Trade Talks, "Tariff Time! Washing Machines and Dirty Trade Policy" | Podcast [21:31 minutes]
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National Security:
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Swanson, "White House to Impose Metal Tariffs" |
Canvas. [6 pp]
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Ward, "Deal to avoid a trade war" |
Online. [4 pp]
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Optional:
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Trade Talks, "The Trump Administration Views Trade as National Security Threat" | Podcast [35:32 minutes]
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Trade Talks, "Steel and Aluminum Tariffs: Trump versus Everyone" | Podcast [19:22 minutes]
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Intellectual Property:
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Trump, "Addressing China's Laws, Policies, Practices, and Actions" |
Online. [1 pp]
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Barfield, "The president's China intellectual property order" |
Online. [3 pp]
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Branstetter, "China's Forced Technology Transfer Problem" |
Online. [10 pp]
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Optional:
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Trade Talks, "Trade and Investment Talks: China Wants America's Technology" | Podcast [17:35 minutes]
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Wroughton & Rampton, "Trump moves toward China tariffs" |
Online. [3 pp]
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Mitchell, "Trump's tariffs prove tougher obstacle than China expected" |
Canvas. [5 pp]
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Optional:
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Trade Talks, "Trump, China, and Tariffs: $3 billion, $50 billion, or $100 billion?" | Podcast [21:16 minutes]
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Other Disputes and Actions:
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Porter, "To Punish Putin, Economic Sanctions Are Unlikely to Do the Trick" |
Canvas.
[4 pp]
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Donnan, "Canada takes US to WTO" |
Canvas. [3 pp]
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O'Keeffe & Hughes, "Trump Deal to Save China's ZTE" |
Canvas. [2 pp]
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Optional:
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Trade Talks, "ZTE, Trump, and China -- What's the Fuss?" | Podcast [17:18 minutes]
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Economist, "Donald Trump's other trade war" |
Canvas. [3 pp]
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Economist, "A WTO ruling on aircraft subsidies" |
Canvas. [3 pp]
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Edmondson, "Tariffs on Canadian Newsprint" |
Canvas. [3 pp]
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B. | Tariffs and Quotas (Sep 13, 18) [26 pp]
Questions
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KOM: [12 pp]
| 9th Ed.: Ch. 9, pp. 192-202, 205-207 10th Ed. (trade only): Ch. 9, pp. 206-217, 220-224
Deardorff, "Nontariff Barriers and Domestic Regulation", pp. 1-12 |
Online [12 pp]
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Lahart, "The Imperfect Science of How Much Tariffs Will Hurt". |
Canvas [2 pp]
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C. |
Exchange Rates (Sep 20) [24 pp] Questions
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KOM, 9th Ed. Ch 14, pp. 320-328 [10 pp]
Canvas (for those who bought the trade-only text)
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Economist, "Watch your BMI" |
Canvas.
[2 pp]
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Taplin, "Why Beijing Won't Just Let the Yuan Go" |
Canvas.
[3 pp]
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Fick, "Nigeria adopts unorthodox measures" |
Canvas.
[3 pp]
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Blackstone, "The World's Most Powerful Currency" |
Canvas.
[4 pp]
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D. |
International Transactions and the Trade Balance (Sep 25) [75 pp]
Questions
|
KOM, 9th Ed. Ch 13 [23 pp]
Canvas (for those who bought the trade-only text)
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Murillo, "International Transactions" |
Online [11 pp]
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Obstfeld, "Game of whack-a-mole" |
Canvas [2 pp]
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~Scott, "Trade deficits and lost U.S. jobs" |
Online [3 pp]
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~Buffett, "Selling the Nation" |
Online [5 pp]
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WTO, "Highlights of world trade," and "Latest trends" |
Canvas.
[31 pp]
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E. |
Policies and Institutions: International (Sep 27 - Oct 2) [82 pp]
Questions
|
KOM: [11 pp]
| 9th Ed.: Ch. 10, pp. 234-244 10th Ed. (trade only): Ch. 10, pp. 252-262
Jackson, Ch. 1 pp. 1-11 Canvas [11 pp]
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Jackson, Ch. 2 Canvas [48 pp]
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WTO, Ministerial ends |
Online [2 pp]
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Rodrik, "The WTO has become dysfunctional" |
Canvas [3 pp]
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Swanson & Ewing, "Crisis at W.T.O." |
Canvas [7 pp]
|
Optional:
|
Trade Talks, "WTO S.O.S. -- Save our System" | Podcast [17:36 minutes]
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F. |
Policies and Institutions: National, United States (Oct 4) [30 pp]
Questions
|
Jackson, Ch. 3, pp. 79-100 Canvas [21 pp]
|
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Verrill, "U.S. Trade Remedies" |
Canvas.
[3 pp]
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USTR, The President's 2018 Trade Policy Agenda |
Canvas.
[2 pp]
|
~Public Citizen, "Fast Track:
An Undemocratic Path to Unfair "Trade"" |
Online [1 pp]
|
Kabel, "What's the Hold-Up?" | Online [1 pp]
|
Ackerman, "Pushes to Revive U.S. Export-Import Bank" |
Canvas.
[3 pp]
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G. |
Policies and Institutions: National, Other (Oct 9) [28 pp]
Questions
|
European Union:
|
Jackson, Ch. 3, pp. 100-104 Canvas [5 pp]
|
EC, "The EU In Brief" | Online [2 pp]
|
EC DG-Trade, "Policy Making" | Online [2 pp]
|
EC DG-Trade, "Anti-dumping" | Online [2 pp]
| Charlemagne, "The Trade War Within" | Online-Proquest [3 pp]
|
Japan:
|
Jackson, Ch. 3, pp. 104-105 Canvas [1 p]
|
METI, "Trade Control" | Online [1 pp]
|
WTO, "Trade Policy Review: Japan" | Online [3 pp]
|
China:
|
MOFCOM, "Mission" of the Ministry of Commerce, People's Republic of China |
Canvas.
[3 pp]
|
WTO, "Trade Policy Review: China" | Online [6 pp]
|
Optional:
|
"The Facts and China’s Position on China-US Trade Friction" | Canvas
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II. | Trade Barriers
|
A. | Non-tariff Barriers (Oct 11) [44 pp]
Questions
|
KOM: [8 pp]
| 9th Ed.: Ch. 9, pp. 202-205, 208-211, 215-218 10th Ed. (trade only): Ch. 9, pp. 217-220, 224-227, 232-235
Jackson, Ch. 5, pp. 153-156 Canvas [3 pp]
|
Deardorff, "Nontariff Barriers and Domestic Regulation", pp. 12-16 |
Online [5 pp]
|
Feenstra, "How Costly Is Protectionism?" |
Online-JSTOR [20 pp]
|
Beattie, "Mind your TRQs" |
Canvas.
[4 pp]
|
Economist, "Buying local is more expensive than it looks" |
Canvas.
[4 pp]
|
Optional:
|
Trade Talks, "Are Trump's Steel Quotas Worse than His Steel Tariffs?" | Podcast [20:26 minutes]
|
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B. | Multi-Market Analysis (Oct 18) [7 pp]
Questions
|
Deardorff, "Trade Policy with Interacting Markets" | Online [7 pp]
|
C. | Cost-Benefit Analysis of Trade Policies (Oct 23) [41 pp]
Questions
|
Fetzer, "U.S. Flat Rolled Steel" |
Canvas.
[26 pp]
|
Fetzer, "Tires from China" |
Canvas.
[15 pp]
|
D. | Why Countries Restrict Trade (Oct 25) [76 pp]
Questions
|
KOM: [15 pp]
| 9th Ed.: Ch. 10, pp. 219-234 10th Ed. (trade only): Ch. 10, pp. 236-252
Hoekman and Kostecki, "Functions of the Multilateral Trading System" pp. 27-40 |
Canvas.
[14 pp]
|
Baldwin and Magee, "Is Trade Policy For Sale?" |
Online-Springer [22 pp]
|
Deardorff and Stern, "Introduction" |
Canvas.
[19 pp]
|
Magee, "Why Are Trade Barriers So Low?" |
Online-Wiley [6 pp]
|
Optional:
|
Davidson, "U.S. Tariffs On Shoes" | Online [4 minutes]
|
|
III. |
The Theory of International Specialization and Exchange
|
A. |
The Standard Trade Model (Oct 30, Nov 6) [23 pp]
Questions
|
KOM, Ch. 6 (any edition) [19 pp]
|
Bernhofen & Brown, "Evidence from nineteenth century Japan" | Online [4 pp]
|
|
|
B. |
Behind the Standard Trade Model: Comp. Adv., Inc. Dist. (Nov 8) [51 pp]
Questions
|
KOM, on comparative advantage: [15 pp]
| 9th Ed.: Ch. 3, pp. 24-40 10th Ed. (trade only): Ch. 3, pp. 24-40 KOM, on effects of trade: [10 pp] 9th Ed.: Ch. 5, pp. 89-93, 97-98 10th Ed. (trade only): Ch. 5, pp. 94-98, 102-103
Deardorff, "Intro to Comparative Advantage" | Online [7 pp]
|
Freeman, "Are Your Wages Set in Beijing?" |
Online-JSTOR [19 pp]
|
C. |
Scale Economies and Imperfect Competition (Nov 13) [22 pp]
Questions
|
KOM: [22 pp]
| 9th Ed.: Ch. 7, pp. 137-148; Ch. 8, pp. 155-166 10th Ed. (trade only): Ch. 7, pp. 145-156; Ch. 8, pp. 164-174
| IV. |
Uses and Abuses of Trade Policy
|
A. | Preferential Trading Arrangements (Nov 15) [66 pp]
Questions
|
KOM: [4 pp]
| 9th Ed.: Ch. 10, pp. 245-249 10th Ed. (trade only): Ch. 7, pp. 263-268
WTO, "Causes and Effects of PTAs" |
Online [30 pp]
|
Posen, "The case for trade" |
Canvas.
[2 pp]
|
Deardorff and Sharma, "Exempted Sectors in Free Trade Agreements" |
Canvas [30 pp]
|
B. | NAFTA and Its Renegotiation (Nov 20) [58 pp]
Questions
|
NAFTA:
|
DeLong, "NAFTA and other trade deals have not gutted American manufacturing" [28p]
Online
|
Renegotiation:
|
Soergel, "What the U.S., Canada and Mexico Want" [5p]
Canvas
|
USTR, "Summary of Objectives for the NAFTA Renegotiation" [17p]
Online
|
Donnan, "Can Donald Trump deliver on his threat to pull out of Nafta?" [5p]
Canvas.
|
Schultz & Aspe, "Nafta Needs an Update, Not Repeal" [3p]
Canvas.
|
C. | Safeguards and Trade Adjustment Assistance (Nov 27, 29) [73 pp]
Questions
|
Jackson, Ch. 7 Canvas [37 pp]
|
Brainard et al., "Insuring America's Workers" |
Online [8 pp]
|
~James, "Maladjusted" |
Online [13 pp]
|
Rosen, "Strengthening Trade Adjustment Assistance" |
Online [10 pp]
|
Lawrence, "A Numbers Argument for Renewing " |
Online [2 pp]
|
Beattie, "The flaws in trying to compensate globalisation's losers" |
Canvas.
[3 pp]
|
Optional:
|
USDOL, "TAA Reauthorization Act of 2015" |
Online [2 pp]
|
D. | Dumping and Anti-Dumping Policy (Dec 4, 6) [66 pp]
Questions
|
Jackson, Ch. 10 Canvas [33 pp]
|
Deardorff, "Economic Perspectives on Anti-Dumping Law" |
Online [15 pp]
|
~Jakob, "Lesser Duty Rule and Community Interest in Anti-dumping" |
Online-Springer [5 pp]
|
Hufbauer and Cimino-Isaacs, "The Outlook for Market Economy Status for China" |
Online [7 pp]
|
Beesley, "Brussels prepares market economy compromise" |
Canvas.
[3 pp]
|
Donnan, "US seeks to deny China market economy status" |
Canvas.
[3 pp]
|
Optional:
|
Trade Talks, "Zeroing: The Biggest WTO Threat You've Never Heard Of" | Podcast [22:14 minutes]
|
E. | Subsidies and Countervailing Duties (Dec 11) [36 pp]
Questions
|
KOM: [6 pp]
| 9th Ed.: Ch. 9, pp. 203-204, Ch. 12 pp. 274-277 10th Ed. (trade only): Ch. 9, pp. 217-218, Ch. 12 pp. 293-296
Jackson, Ch. 11 Canvas [25 pp]
|
Mauldin, "U.S. Trade Fight With Canada" |
Canvas.
[3 pp]
|
Wall, "Support to Boeing Not a Prohibited Subsidy" |
Canvas.
[2 pp]
|
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