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economy experiences economic recovery and also it experience economic recession. Many Americans feared that the end of World War II and the subsequent drop in military spending might bring back the hard times of the Great Depression. But instead, pent-up consumer demand fueled exceptionally strong economic growth in the post war period. A housing boom, stimulated in part by easily affordable mortgages for returning members of the military, added to the expansion. Lawmakers considered a wide range of protectionist proposals during these years, many of them from American industries that faced increasingly effective competition from other countries. Congress also grew reluctant to give the president a free hand to negotiate new trade liberalization agreements with other countries. On top of that, the end of the Cold War saw Americans impose a number of trade sanctions against nations that it believed were violating acceptable norms of behavior concerning human rights, terrorism, narcotics trafficking, and the development of weapons of mass destruction. Officially, the nation remained committed to free trade as it pursued a new round of multilateral trade negotiations; worked to develop regional trade liberalization agreements involving Europe, Latin America, and Asia; and sought to resolve bilateral trade disputes with various other nations. But political support for such policies appeared questionable. That did not mean, however, that the United States was about to withdraw from the global economy. Several financial crises, especially one that rocked Asia in the late 1990s, demonstrated the increased interdependence of global financial markets. As the United States and other nations worked to develop tools for addressing or preventing such crises, they found themselves looking at reform ideas that would require increased international coordination and cooperation in the years ahead. Protectionism- Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts to local businesses and direct state intervention. Any time a government undertakes any of these actions, they are engaging in protectionism. There is significant debate surrounding the merits of protectionism. Critics argue that, over the long term, protectionism often ends up hurting the people it is intended to protect and often promotes free trade as a superior alternative to protectionism. Trade liberalization- 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 nontariff obstacles (like licensing rules, quotas and other requirements). The easing or eradication of these restrictions is often referred to as promoting "free trade." Those against trade liberalization claim that it can cost jobs and even lives, as cheaper goods flood the market (which at times may not undergo the same quality and safety checks required domestically). Proponents, however, say that trade liberalization ultimately lower consumer costs, increases efficiency and fosters economic growth. Uruguay Round- It took seven and a half years, almost twice the original schedule. By the end, 123 countries were taking part. It covered almost all trade, from toothbrushes to pleasure boats, from banking to telecommunications, from the genes of wild rice to AIDS treatments. It was quite simply the largest trade negotiation ever, and most probably the largest negotiation of any kind in history. At times it seemed doomed to fail. But in the end, the Uruguay Round brought about the biggest reform of the worlds trading system since GATT was created at the end of the Second World War. And yet, despite its troubled progress, the Uruguay Round did see some early results. Within only two years, participants had agreed on a package of cuts in import duties on tropical products which are mainly exported by developing countries. They had also revised the rules for settling disputes, with some measures implemented on the spot. And they called for regular reports on GATT members trade policies, a move considered important for making trade regimes transparent around the world.
GATT- The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade. According to its preamble, its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization in 1995. More recently, America's leaders have noted that competition from foreign producers also helps keep prices down for numerous goods, thereby reducing pressures from inflation. Americans contend that free trade benefits other nations as well. Economists have long argued that trade allows nations to concentrate on producing the goods and services they can make most efficiently -thereby increasing the overall productive capacity of the entire community of nations. What's more, Americans are convinced that trade promotes economic growth, social stability, and democracy in individual countries and that it advances world prosperity, the rule of law, and peace in international relations. While efforts to liberalize trade traditionally focused on reducing tariffs and certain nontariff barriers to trade, in recent years they have come to include other matters as well. Americans argue, for instance, that every nation's trade laws and practices should be transparent -- that is, everybody should know the rules and have an equal chance to compete. The United States and members of the Organization for Economic Cooperation and Development (OECD) took a step toward greater transparency in the 1990s by agreeing to outlaw the practice of bribing foreign government officials to gain a trade advantage. Do not discriminate against foreign companies, and are consistent with international practices. American interest in deregulation arises in part out of concern that some countries may use regulation as an indirect tool to keep exports from entering their markets. Among the countries that have been subject to such trade restrictions are Burma, Cuba, Iran, Iraq, Libya, North Korea, Sudan, and Syria. But in 2000, the United States repealed a 1974 law that had required Congress to vote annually whether to extend "normal trade relations" to China. The step, which removed a major source of friction in U.S.-China relations, marked a milestone in China's quest for membership in the World Trade Organization. There is nothing new about the United States imposing trade sanctions to promote political objectives. Americans have used sanctions and export controls since the days of the American Revolution, well over 200 years ago. But the practice has increased since the end of the Cold War. Still, Congress and federal agencies hotly debate whether trade policy is an effective device to further foreign policy objectives.
The Trade Expansion Act of 1962, which authorized the so-called Kennedy Round of trade negotiations, culminated with an agreement by 53 nations accounting for 80 percent of international trade to cut tariffs by an average of 35 percent. In 1979, as a result of the success of the Tokyo Round, the United States and approximately 100 other nations agreed to further tariff reductions and to the reduction of such nontariff barriers to trade as quotas and licensing requirements. A more recent set of multilateral negotiations, the Uruguay Round, was launched in September 1986 and concluded almost 10 years later with an agreement to reduce industrial tariff and nontariff barriers further, cut some agricultural tariffs and subsidies, and provide new protections to intellectual property. Perhaps most significantly, the Uruguay Round led to creation of the World Trade Organization, a new, binding mechanism for settling international trade disputes. By the end of 1998, the United States itself had filed 42 complaints about unfair trade practices with the WTO, and numerous other countries filed additional ones -- including some against the United States. The first free trade agreement entered into by the United States, the U.S.-Israel Free Trade Area Agreement, took effect in 1985, and the second, the U.S.-Canada Free Trade Agreement, took effect in
1989. The latter pact led to the North American Free Trade Agreement in 1993, which brought the United States, Canada, and Mexico together in a trade accord that covered nearly 400 million people who collectively produce some $8.5 trillion in goods and services. Geographic proximity has fostered vigorous trade between the United States, Canada and Mexico. As a result of NAFTA, the average Mexican tariff on American goods dropped from 10 percent to 1.68 percent, and the average U.S. tariff on Mexican goods fell from 4 percent to 0.46 percent. Of particular importance to Americans, the agreement included some protections for American owners of patents, copyrights, trademarks, and trade secrets; Americans in recent years have grown increasingly concerned about piracy and counterfeiting of U.S. products ranging from computer software and motion pictures to pharmaceutical and chemical products.
REGIONALISM -focuses on the interests of a particular region or group of regions, whether traditional or formal (political divisions, administrative divisions, country subdivisions or subnational units). Regionalists aim at increasing their region's influence and political power, either through movements for limited form of autonomy (devolution, states' rights, decentralization) or through stronger measures for a greater degree of autonomy (sovereignty, separatism, independence). Regionalists often favor loose federations or confederations over a unitary state with a strong central government. MULTILATERALISM- multiple countries working in concert on a given issue. Multilateralism was defined by Miles Kahler as international governance of the many, and its central principle was opposition [of] bilateral discriminatory arrangements that were believed to enhance the leverage of the powerful over the weak and to increase international conflict. In 1990, Robert Keohane defined multilateralism as the practice of coordinating national policies in groups of three or more states. BILATERALISM- consists of the political, economic, or cultural relations between two sovereign states. For example, free trade agreements signed by two states are examples of bilateral treaties. It is in contrast to unilateralism or multilateralism, which refers to the conduct of diplomacy by a single state or multiple states, respectively. Typically when states recognise one another as sovereign states and agree to develop diplomatic relations, they exchange diplomatic agents such as ambassadors to facilitate dialogues and cooperation in various fields. Trade deficit- An economic measure of a negative balance of trade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. Economic theory dictates that a trade deficit is not necessarily a bad situation because it often corrects itself over time. However, a deficit has been reported and growing in the United States for the past few decades, which has some economists worried. This means that large amounts of the U.S. dollar are being held by foreign nations, which may decide to sell at any time. A large increase in dollar sales can drive the value of the currency down, making it more costly to purchase imports. Managed- float regime- is the current international financial environment in which exchange rates fluctuate from day to day, but central banks attempt to influence their countries' exchange rates by buying and selling currencies. It is also known as a dirty float. In an increasingly integrated world economy, the currency rates impact any given country's economy through the trade balance. In this aspect, almost all currencies are managed since central banks or governments intervene to influence the value of their currencies. Bretton Woods- The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent nation-states. On 15 August 1971, the United States unilaterally terminated convertibility of the US$ to gold. This [1] brought the Bretton Woods system to an end and saw the dollar become fiat currency. This action, referred to as the Nixon shock, created the situation in which the United States dollar became a reserve
currency used by many states. At the same time, many fixed currencies (such as GBP, for example), also became free floating. IMF- The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. The system dissolved between 1968 and 1973. In August 1971, U.S. President Richard Nixon announced the "temporary" suspension of the dollar's convertibility into gold. While the dollar had struggled throughout most of the 1960s within the parity established at Bretton Woods, this crisis marked the breakdown of the system. An attempt to revive the fixed exchange rates failed, and by March 1973 the major currencies began to float against each other. Since the collapse of the Bretton Woods system, IMF members have been free to choose any form of exchange arrangement they wish (except pegging their currency to gold): allowing the currency to float freely, pegging it to another currency or a basket of currencies, adopting the currency of another country, participating in a currency bloc, or forming part of a monetary union. The World Bank Institute (WBI) is a global connector of knowledge, learning and innovation for poverty reduction. We connect practitioners and institutions to help them find suitable solutions to their development challenges. With a focus on the "how" of reform, we link knowledge from around the world and scale up innovations. With more than 60 years experience in financing the International Bank for Reconstruction and Development (IBRD) and investing its reserves and pension fund, the World Bank Treasury has developed substantial expertise in asset and liability management.