In the first session we explore the topics and issues of international trade. We will review highlights from history, describe notable current trade laws, and introduce the WTO.

Chapter 5 - Introductory Issues
Sections 5-1 to 5-5F
(Note: There is no need to follow the links in this chapter)

Chapter 10 - Trade Policy Tools
Sections 10-0 to 10-7

Chapter 20 - Trade History and Trade Law
Sections 20-0 to 20-4

The WTO Agreements
A description of some of the details behind WTO rules on antidumping measures, subsidies and countervailing measures and safeguards.

How the WTO Works

Boeing sees little chance of deal with Airbus before WTO ruling AFP-Google, Jan 2008

Antidumping duties slapped on Chinese pipe: Chesterton Tribune: Jan 2008

Think Again: International Trade
Article by Arvind Panagariya that highlights some important regularities about international trade.

Trade Policy Review: US (2006)
This is an overview of US trade policies conducted by the WTO.

US Tariff Schedule
Click here to find the most recent tariff schedule for all goods in the US. CLICK on these links for the tariffs schedules for vegetables and watches.

Understanding US Antidumping & Countervailing Duty Investigations - Summary of Antidumping and Countervailing Duty Procedures from the US Intl. Trade Commission website.

Jeopardy 5-1
Jeopardy 10-1
Jeopardy 20-1
Internet Questions 20-1A
Internet Questions 20-1D
Problem Set 20 1-1
Problem Set 20 1-2

This session presents the first formal model of international trade. The chapter emphasizes the importance of the assumptions in generating the model results. Students learn some of the surprising outcomes of the Ricardian model, such as, that less productive nations may nonetheless benefit from free trade with its more productive neighbors.

Chapter 40 - The Ricardian Model of Comparative Advantage
Read sections 40-0 to 40-5

Davos 2008: On the cusp of economic history, International Herald Tribune , Jan 2008

Free trade: dangerous policy for this world, Daytona Beach News, Jan 2008

The new world order in services: Sify Business, India, Jan 2008

Jeopardy 40-1
Problem Set 40 1-1
Problem Set 40 2-1

The welfare effects in the Ricardian model are worked out by emphasizing changes in the real wages of workers. This allows us to focus on individuals rather than the effect of trade on the nation. (as is done with the national indifference curve diagram). The pure exchange model introduces the notion that trade can redistribute income. The immobile factor model introduces a realistic issue (factor immobility) into the Ricadian model and provides a reason for the redistribution of income. The model also demonstrates how small assumption changes can lead to important changes in the outcomes.

Chapter 40 - The Ricardian Model of Comparative Advantage
Read sections 40-6 to 40-9

Chapter 30 - A Pure Exchange Model of Trade
Read sections 30-1 to 30-5

Chapter 70 - Factor Mobility and Trade
Read sections 70-0 to 70-19

Schumpeter's Creative Destruction
This is an except from Capitalism, Socialism and Democracy (1942) describing the process of creative destruction

Economic Turbulence

More on Economic Churning

When Labor Loses Out to Trade
by Gustav Ranis and David Corderi, YaleGlobal, 10 August 2006

Information about US Trade Adjustment Assistance
a brief description of TAA provided by the Office of the White House

Problem Set 40 3-1
Problem Set 70 2-1
Problem Set 70 2-2
Problem Set 70 3-1

The factor proportions (or H-O) model is the second major trade model presented formally. This session presents the key assumptions of the model then builds the key relationships between endowments and outputs in the Rybczynski theorem and the relationship between output prices and factor prices in the Stolper-Samuelson theorem. Both of these relationships are extended to the more general versions of the theorems, the magnification effects.

Chapter 60 - The Heckscher-Ohlin (Factor-Proportions) Model
Read sections 60-0 to 60-6

Problem Set 60 3-1

The session presents the H-O theorem which predicts the pattern of trade, notes the redistributive welfare effects of trade because of the changes in factor prices, discusses the factor-price equalization theorem and notes the importance of the compensation principle.

Chapter 60 - The Heckscher-Ohlin (Factor-Proportions) Model
Read sections 60-7 to 60-14

Why ‘Outsourcing’ May Lose Its Power as a Scare Word
By DANIEL GROSS, NY Times, August 13, 2006

The Leontief Paradox
Kwan Choi's comprehensive discussion of the famous trade paradox.

Jeopardy 60-1
Problem Set 60 2-1
Problem Set 60 2-2
Problem Set 60 2-3

In this session we'll introduce economies of scale as a basis for international trade.

Chapter 80 - Economies of Scale and International Trade
Read sections 80-0 to 80-5e

Jeopardy 80-1

This session first shows a represention of a free trade equilibrium in a partial equilibrium model. This model is then used to demonstrate the price effects of a tariff in large and small country cases. After explaining the concepts of consumer and producer surplus, the welfare effects of a tariff are presented. Finally a tariff setting game between governments is used to identify the motivation for trade wars.

Chapter 90 - Trade Policy Effects with Perfectly Competitive Markets
Read sections 90-0 to 90-11

Section 110-1 - Retaliation and Trade Wars

Jeopardy 90-1
Problem Set 90 3-1
Problem Set 110 2-1
Problem Set 110 2-2
Problem Set 110 2-3

Trade policy analysis is continued with a look at import quotas, VERs, export taxes and export subsidies. The similarities between the policies is noted. Although the small country welfare effects of each policy are not yet included in the notes, students should be able to apply the principles learned to evaluate those situations. The effects of retaliation to an export subsidy with a countervailing duty is also presented.

Chapter 90 - Trade Policy Effects with Perfectly Competitive Markets
Read sections 90-12 to 90-27

Section 110-3 - Countervailing Duties

Chapter 105 - Political Economy and International Trade
Read sections 105-0 to 105-7

Problem Set 90 2-1
Problem Set 90 2-2
Problem Set 90 2-3
Problem Set 90 2-4
Problem Set 90 3-2

Concerns about domestic policy effects on international trade flows have become increasingly widespread. This session will emphasize three key ideas. The first is that domestic government policies, such as production subsidies or consumption taxes, can actually be a cause of international trade. The second is to show the welfare effects of domestic policies when a country is open to internationale trade. The third is to show that combinations of domestic policies can duplicate the effects of trade policies.

Chapter 95 - Domestic Policy Effects on International Trade
Read sections 95-0 to 95-3

Domestic Support Policies
A briefing paper by the Economic Research Service at the US Dept. of Agriculture

Jeopardy 95-1
Problem Set 95 2-1
Problem Set 95 3-1
Problem Set 95 3-2

This is perhaps the most important session in a trade course. It will first identify a series of market imperfections and distortions and point out how these are likely to be prevalent in the real world. Next it shows that in the presence of a market imprefection, carefully selected trade policies can often be used to raise the natioanl welfare of a country. Third it is shown that carefully selected domestic policies are often superior to trade policies as a way of promoting the national welfare of a country.

Chapter 100 - Trade Policies with Market Imperfections and Distortions
Read sections 100-0 to 100-8

Chapter 110 - Special Topics
Read sections 110-2 and 110-2a

Trade and the Environment in the WTO
This press brief provides an overview of the work by the WTO Committee on Trade and the Environment

Jeopardy 100-1
Problem Set 100 2-1
Problem Set 100 2-2
Problem Set 100 3-2

In this session we'll review the course findings by focusing on what trade theory teaches us about the controversy over free trade.

Chapter 120 - Evaluating the Controversy Between Free trade and Protectionism
Read sections 120-1 to 120-6

Jeopardy 110-1
Jeopardy 120-1