THE UNIVERSITY OF MICHIGAN
Gerald R. Ford School of Public Policy
and
Department of Economics

SPP/ECON 541
INTERNATIONAL TRADE POLICY

SYLLABUS
Fall 2012, Lucia Tajoli and Alan Deardorff

Text Requirements Schedule Disabilities 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.

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.

Prerequisite: SPP/Econ 555 or equivalent course in intermediate microeconomics
Organization: The course meets twice a week, Mondays and Wednesdays, 8:30-10:00 AM, in room 1230 Weill.

READINGS

REQUIREMENTS

Problem Sets   0%
Class participation 10%
Papers 30%
Exam #1 30%
Exam #2 30%
SCHEDULE

Paper #1 Wednesday, October 17 8:40 AM
Exam #1 Monday, October 29 in class
Paper #2 Wednesday, November 12 8:40 AM
Paper #3 Wednesday, December 3 8:40 AM
Exam #2: Tuesday, December 18 8:00-10:00 AM

WRITING ASSISTANCE


STUDENTS WITH DISABILITIES

WHERE AND WHEN TO FIND US


COURSE OUTLINE AND READING LIST
NOTES: 1. Click title for citation; click Online for item if on the web, CTools if not.
2. Unmarked readings are required, while those marked with an asterisk, *, present deeper analysis of the topic that is not required but might help you in better understanding the issues. Readings marked with a double asterisk, **, represent views that are not necessarily justified by economic analysis. They contain useful factual information, but we disagree with some of their interpretations, and they are here so that you will be aware of a range of views.
I. Overview of the International Economy
A. The State of Play in International Trade and Trade Policy (Sep 5)
KOM, Chs. 1, 2
WTO, "World Trade in 2011" | Online [18p]
     (See also International Trade Statistics 2011)
Evenett, "Executive Summary," Débâcle | Online [8p]
*Hanson, "Rise of Middle Kingdoms" | Online-AEA [24p]
*Rodrik, "Death of the Globalization Consensus" | Online [3p]
B. A Baseline Model of International Trade and Trade Barriers: The Gravity Model (Sep 10)
KOM, Ch. 2, pp. 10-15 (8th ed. pp. 13-18) [5p]
*Anderson, "The Gravity Model," | Online [46p]
*Baldwin & Taglioni, "Gravity for Dummies" | Online-NBER [31p]
II.Trade Policy Instruments and Trade Barriers
A.Tariffs and Quotas (Sep 12, 17)
KOM, Ch. 9 (8th ed. Ch. 8) [22p]
Deardorff, "Nontariff Barriers and Domestic Regulation", pp. 1-12 | Online [12p]
B.Non-tariff Barriers (Sep 19)
KOM, Ch. 9, including Appendix (8th ed. Ch. 8 including Appendix 2)
Jackson, Ch. 5, pp. 153-156 [3p]
Deardorff, "Nontariff Barriers and Domestic Regulation", pp. 12-16 | Online [5p]
*Feenstra, "How Costly Is Protectionism?" | Online-JSTOR [20p]
III.Trade Agreements and Trade Institutions
A.Why Countries Restrict Trade (Sep 24)
KOM, Chs. 10, 12 (8th ed. Chs. 9, 11) [55p]
Baldwin and Magee, "Is Trade Policy For Sale?" | Online-Proquest [22p]
Deardorff and Stern, "Introduction" | CTools CTools Direct [20p]
B. Policies and Institutions: The WTO (Sep 26, Oct 1)
KOM, Ch. 10, pp. 234-244 (8th ed. pp. 227-238) [11p]
Jackson, Ch. 1, pp. 1-11, Ch. 2 [59p]
*Bouët and Laborde, "Cost of a Failed Doha Round" | Online [8p]
C. Policies and Institutions: Preferential Trade Agreements (Oct 3)
WTO, "Causes and Effects of PTAs", pp. 92-109 | Online [18p]
*Bhagwati, "The Wrong Way to Free Trade" | Online | Online-Infotrac [3p]
D. US Trade Policies and Institutions (Oct 8, Alan Deardorff)
Jackson, Ch. 3 [26p]
Verrill, "U.S. Trade Remedies" | Online [3p]
USTR, "President's Trade Agenda" | Online [22p]
Kramer, "Effect of Russia Joining W.T.O." | Online |Online - Infotrac [4p]
**Tucker & Wallach, "Rise and Fall of Fast Track" | Online [3p]
E. Deeper Economic Integration and Recent Developments in Trade Agreements (Oct 10)
WTO, "Causes and Effects of PTAs" pp. 109-121. Online [12p]
 

*** FALL STUDY BREAK, Oct 15-16 ***

F. The European Union (Oct 17)
EU, "The Single Market" | Online [4p]
EU, "How the EU works" | Online [1 page of links to follow]
EC DG-Trade, "Our Role" | Online [2p]
G. Trade Policy and Economic Development (Oct 22)
KOM, Ch. 11 (8th ed. Ch. 10) [15p]
*UNCTAD, "Development Strategies" | Online [14p]
*Krueger, "Trade Policy and Economic Development" | Online-NBER [57p]
*Rodrik, Making Openness Work. Book on reserve.
Catch up and Review (Oct 24)
*** EXAM #1, in class, Tuesday Oct 29 ***
(Covers through assignments for Oct 22, Trade Policy and Economic Development.)
 

IV.Trade Policy Analysis
A.Multi-Market Analysis (Oct 31)
Deardorff, "Interacting Markets" | Online [7p]
B.Cost-Benefit Analysis of Trade Policies (Nov 5)
Fetzer, "A Partial Equilibrium Approach of Modeling Vertical Linkages in the U.S. Flat Rolled Steel Market," USITC, January 2005. Available under Resources in CTools.
Fetzer, "Certain Passenger Vehicle and Light Truck Tires from China -- Remedy Memorandum," USITC, June 19 2009. Available under Resources in CTools.
V. The Theory of International Specialization and Exchange
A. The Standard Trade Model (Nov 7)
KOM, Ch. 6 (8th ed., Ch. 5) [19p]
B. Behind the Standard Trade Model: Comp. Adv., Inc. Dist. (Nov 12)
KOM Ch. 3, pp. 24-40 on comparative advantage (8th ed. pp. 27-42) [15p]
KOM Ch. 5, pp. 89-98 on effects of trade (8th ed. pp. 64-71) [7p]
Deardorff, "Comparative Advantage" | Online [7p]
*Freeman, "Wages Set in Beijing?" | Online-JSTOR [19p]
C. Scale Economies and Imperfect Competition (Nov 14)
KOM, Ch. 7, pp. 137-147 (8th ed. Ch. 6, pp. 114-117, 140-146) [11p]
KOM, Ch. 8, pp. 155-172, 178-180 (8th ed. Ch. 6, pp. 117-140 [24p]

 

VI. Uses and Abuses of Trade Policy
A.Safeguards and Trade Adjustment Assistance (Nov 19, 21)
Jackson, Ch. 7 [37p]
Brainard et al., "Insuring America's Workers" | Online [8p]
Rosen, "Strengthening Trade Adjustment Assistance" | Online [10p]
**James, "Maladjusted" | Online [13p]
B.Dumping and Anti-Dumping Policy (Nov 26, 28)
Jackson, Ch. 10 [33p]
Deardorff, "Economic Perspectives on Anti-Dumping Law" | Online [15p]
**Jakob, "Lesser Duty Rule" | Online [5p]
C.Subsidies and Countervailing Duties (Dec 3, 5)
KOM, Ch. 12, pp. 274-277 (8th ed. Ch. 11, pp. 268-272) [4p]
Jackson, Ch. 11 [25p]
Catch up and Review (Dec 10)
*** EXAM #2 (Semi-cumulative) ***
Tuesday, Dec 18, 8:00-10:00 AM