La Trobe University
School of Economics and Finance
Semester 1, 2010, Bundoora
International Business Environment
Tutorial 4, a week beginning of 29 March
Question 1. Read the Closing Case: Trade in textiles: holding the Chinese juggernaut in check (Dowling P.229-230) and answer the questions at the end. Be brief in your answers.
CLOSING CASE: Trade in textiles: holding the Chinese juggernaut in check
The closing case explores the consequences of the expired Multi-Fiber Agreement (MFA) on both developing and developed countries. The agreement, which had been in place since 1974, involved a system of quotas designed to protect textile producers in developed nations from foreign competition. When the decision was made to let the agreement expire, many developing nations expected to benefit. However, China’s entry into the WTO on 2001 changed everything. By 2003, China was making 17 percent of the world’s textiles, and that percentage was expected to continue to rise. Various groups appealed to the WTO to stop the removal of the quotas, but were rejected. China imposed its own limits on exports in 2004. Discussion of this case can revolve around the following questions:
1.1: Was the removal of the Multi-Fiber Agreement a positive thing for the world economy? Why, or why not?
1.2: As a producer in a developing nation such as Bangladesh that benefited from the MFA agreement, how should you respond to the expiration of the agreement?
1.3: Do you think China was right to place a tariff on exports of textiles from China? Why, or why not? Does such action help or harm the world economy?
1.4: Whose interests were served by the November 2005 agreement between the U.S. and China to limit the growth of Chinese textile imports into the U.S.? Do you think the agreement was a good one for the U.S.?
2.1 Discuss Trade Creation and Trade Diversion of AANZFTA,...