The Power of Policy Module 3

Transcription

1 The Power of Policy Module 3 Student name: Instructions to teachers: This module can be completed online or on paper. For many of the learning experiences, students need access to the Internet. The Power of Policy is also supported by: Instructions to students: Trade, The Banana Wars, Sweatshops and Coffee Revolution issues presentations. This module gives an overview of some of the ways in which rules and regulations affect trade both locally and globally. It is the third in a series of four modules produced by Trade Aid. Whether or not you are completing the work on paper or in a Word document or similar, we would recommend that you have appropriate headings and complete either all the options or just those your teacher wants you to do. Concepts are highlighted in the table at the top of each section to help you consider what concepts may apply to the issues being studied. E.g: Human Rights When a appears, this is to encourage you to consider some wider critical thinking concerning an issue. Key to Icons Critical Thinking Concepts Action Issues Extra Resources Class: Overview New Zealand is not a large trading nation, but we do rely on many exports and imports for our economy. Global trade between countries has been happening for centuries, but rules and regulations about what can be traded and for how much are always being debated. In this module you ll learn some key trading terms and look at how sometimes the trading game is not a level playing field. Asking critical questions How are politics on a national or global level involved? Describe the forces (social, economic, political) that are present in this issue How difficult do you think it might be to bring about change in this issue? Who benefits from the outcomes and who might be disadvantaged? MODULE 3 THE POWER OF POLICY PAGE 1

2 1) Who do we trade with? MAIN TRADING PARTNERS SEPTEMBER 2017 IMPORTS Goods & Services ($million) Discussion: It s really important to find out what we have that others need and what we need from other countries. Here are two graphs. Study each and answer the questions that relate to them. 1. Look at the total we import in terms of millions of dollars and the total we export. Does it surprise you that we import less than we export or is this what you were expecting? Australia 11,448 European Union 1 11,934 China 10,861 USA 8,386 Japan 3,899 1 European Union has 28 member states Australia 13,043 EXPORTS Goods & Services ($million) China 13,232 European Union 1 8,225 USA 8,164 Japan 3, Describe the difference between our trading with the European Union and with China? 3. What kinds of goods or services do you think we import from Singapore and export to Japan? Accessed from Stats NZ Nov 2017 MODULE 3 THE POWER OF POLICY PAGE 2

3 NZ s EXPORTS by commodity/service type, year ended March Travel Services are things like booking a hotel overseas or paying for a flight. What does this graph tell you about New Zealanders and their overseas travel, and tourists coming here? 2. What key things do we need to import into New Zealand because we don t produce them here? NZ s IMPORTS by good/service type, year ended March 2017 A reminder that trade in goods measures physical items that are bought and sold (e.g. food or footwear). Trade in services measures transactions where no physical product is traded (e.g. spending by international tourists, or providing advice to an overseas client). For more information about NZ s import and exports, explore this link: MODULE 3 THE POWER OF POLICY PAGE 3

4 2) The World Trade Organization ISSUES [Slideshow Presentations] Trade Rules govern our lives and making things, selling and buying them are all activities covered by a host of policies (guidelines) and rules and regulations (the laws that can be enforced). Rules and regulations about trade are made at several levels local government, central government and internationally. Trade rules come into being in several ways: by each country choosing their own rules for their own situations between many countries who all have to agree on the same rules at the WTO by a small group of countries negotiating this is called a multilateral agreement by two countries negotiating this is called a bilateral agreement. The World Trade Organization, or WTO, established in 1995, is perhaps the largest group of countries (162 members) that tries to set rules and regulations to oversee international trade. In its own words: The WTO provides a forum for negotiating agreements aimed at reducing obstacles to international trade and ensuring a level playing field for all, thus contributing to economic growth and development. The WTO tries to reduce barriers, such as tariffs, to trade. This is what it means by free trade. Ideally it would like to have open borders so that there are no restrictions on people trading with each other. The WTO does realise that sometimes protections are necessary and so local laws to protect workers or the environment should be respected. Unfortunately there are many cases where countries lose out to more powerful countries or companies. There are currently 16 different multilateral free trade agreements across the WTO. New Zealand has its own trade rules that are determined as being best for New Zealanders. Who are the main countries that New Zealand has negotiated agreements with to determine a different set of trade rules, applicable only to these countries? There are many different trade agreements in place, but the following are some of the recent and major ones: NZ is a member of the WTO so at each WTO meeting we help determine the rules that apply to us and all other members of the WTO. NZ has free trade agreements with groups of countries, such as the ASEAN group: Singapore, Malaysia, Indonesia, the Philippines, Thailand, Vietnam, Laos, Cambodia, Myanmar and Brunei. NZ has signed free trade agreements with single countries such as Singapore, Australia, China, Thailand. In 2016 NZ signed the TPPA with 11 other countries of the Pacific Rim region. This was a controversial free trade agreement which took over seven years to negotiate. Discussion: 1. What are some of the reasons New Zealand might sign up with other countries for free trade agreements? 2. Do you know of any countries that New Zealanders are not allowed to trade with? These might be countries that have international sanctions put on them. Image Credit: Neil Ballantyne from Wellington, New Zealand - Stop TPPA rally 3. If you buy something on the Internet from outside of New Zealand, you are effectively trading with a different country. Are there any laws to protect you if things go wrong with your purchase? MODULE 3 THE POWER OF POLICY PAGE 4

5 3) Terms used in trade Table matching: Match the terms on the left with their definitions on the right Outsourcing A. Money provided by the government to a domestic producer. They can keep consumer prices low while maintaining a higher income for domestic producers. B. A limit of the quantity of goods that can be imported, which raises the domestic price of the imported goods. Subsidy C. A country has a over another country if it is able to produce a product more efficiently, or at a lower cost, than it can produce other items. Tariff D. This is when policies are designed by a country s government to protect domestic industries from competition with foreign industries. For example, providing subsidies to domestic industries. In Japan, for example, the Japanese Government pays out money to keep rice farmers in business. E. A tax on imported goods Comparative advantage Externalities F. This occurs when a company hires another business to provide or produce goods/services that were previously handled by the company itself. For example, in New Zealand call centres for Spark are now based in the Philippines. G. These are the costs that arise from an economic transaction that fall on people who did not participate in the transaction. For instance, if a factory in the United States leaks oil that drifts downriver to Mexico, and the cost of (cleaning up) that pollution is borne by Mexico, the pollution is an Import Quota Protectionism Answers: Outsourcing F, Subsidy A, Tariff - E, Comparative Advantage C, Externalities G, Import Quota B, Protectionism - D MODULE 3 THE POWER OF POLICY PAGE 5

6 4) It s not always fair CONCEPTS Disparity Fairness and Social Justice Negotiation can be a fair process but it can also be a flawed process. Sometimes one country is more powerful than the other and this can skew the negotiations. Within the WTO, there are negotiations every two years. They have a big conference and representatives all get together. In 2001 in Doha, Qatar, they agreed to disagree on several aspects and many people say that things stalled after Doha. Many countries grew frustrated and new agreements were discussed, including the Trans-Pacific Partnership (TPPA) which New Zealand is involved in. The most recent WTO talks in December 2015 in Nairobi, Kenya, have been hailed a success for developing countries, and people are saying that the stalemate of Doha is now passed. Asking critical questions Discussion: What are the causes of this issue and who might be affected? Are there some causes and consequences of this issue that are not mentioned? To what extent are you affected by this issue? Arrange the students in small groups of 2 or 3 and hand out one of the following four situations, which have come from real examples and allegations. In groups, students talk about the following questions and feed their thoughts back to the class in their groups. Describe what is happening in this situation Is the situation fair or unfair? Why? What information might be missing from the examples? Could this unknown information change how fair or unfair the situation is? Do you have suggestions for making the situation fairer based on what you know? Are these suggestions relevant for New Zealand to keep in mind when trading with the various countries we trade with? MODULE 3 THE POWER OF POLICY PAGE 6

7 Situation 1: Haiti and World Trade Organization participation I am from Haiti and this year I was the only representative from my country at the World Trade Organisation meetings. Even though each country has an equal number of votes (just one), we do not have equal ability to decide what is to be voted on. It is difficult for my country to have any influence because at the WTO several meetings run at the same time and being only one person, I could attend only one! Other larger countries had hundreds of negotiators, like the EU with 500! Having so many negotiators means they can attend each meeting and have their say. They know all that is going on and they have people researching information for them around the clock. The richer countries can even send someone to line up for the next meeting before the previous ones are over because it is first in first serve to meetings with limited participant numbers. Situation 3: Stockpiling what s ours for our benefit. From: And: In 2014 the US won a trade battle with China over rare earth minerals such as lithium and tungsten. These minerals are used in high tech electronics and are in high demand. Although China had been supplying 85% of the world market in these rare minerals, in 2008 it decided not to mine so much, for environmental reasons and also not to export as much but keep some back for its own industries. The US saw red and accused China of stockpiling and being unfair. The case at the WTO was awarded to the US, but such a victory could prove to be a problem because of natural gas. The US currently favours its own companies for using its natural gas so doesn t export that much. So the US could be accused of doing the same thing China was doing. Situation 2: India s point of view From: And: In December 2015 at the WTO trade talks in Nairobi, Kenya, Indian commerce minister Nirmala Sitharaman stressed that farm lobby groups in rich Western nations have been affecting poorer farmers in developing nations for decades. Farm subsidies, to the tune of billions of dollars has kept inefficient farmers in Europe in business at the expense of developing farmers. The Nairobi talks had to be extended but they ended with a win for developing nations, with an historic agreement: The Ministerial Decision on Export Competition. Under the decision, developed members have committed to remove export subsidies immediately, except for a handful of agriculture products, and developing countries will do so by Developing members will keep the flexibility to cover marketing and transport costs for agriculture exports until the end of 2023, and the poorest and food-importing countries would enjoy additional time to cut export subsidies. India s commentators argued that this decision has been twenty years in the making. Situation 4: The ISDS how big companies can sue governments You may have heard of Big Tobacco suing the Australian Government over the issue of plain packaging. What happened was that cigarette manufacturer Philip Morris tried to sue the Australian Government for not letting it use plain packaging. The Australian health authorities had made a law to put scary pictures on cigarette boxes to deter smokers and Philip Morris didn t like that law. In this case, as of December 2015, the Australian Government has won. How could this have happened? It s all down to the special legal right called an investor-to-state dispute settlement (ISDS). Under free trade agreements those who invest in a foreign country can use this system to challenge a law, regulation, or any other government decision. Investors are those who buy property whether it s an acre of land, a factory, or stocks and bonds. Or, in the Australian situation provide or sell things in a country. In 1997 a US company called Metalclad actually sued the Mexican government US$15 million over a local government s decision to deny a permit to Metalclad to operate a toxic waste dump. Local citizens felt the dump would pollute their water supply and petitioned their government to deny the permit. Their local government said no and Metalclad wasn t happy. Metalclad won more than $15 million through using the ISDS system. What really happens in the ISDS cases is that the governments don t actually lose or have to change the law but they are sued for an awful lot of money. MODULE 3 THE POWER OF POLICY PAGE 7

8 5) (extension): The TPPA CONCEPTS Hopes to: Reduce tariffs for our exports so New Zealand can earn more money. Decision Making You ve probably heard of the Trans-Pacific Partnership Agreement. It can be difficult to understand all the fuss and bother that you might read about in the news concerning this trade agreement. In pairs, create a poster, A3 size that clearly explains the TPPA (or TPP) to a younger person than yourself, such as a Year 9 social studies student. Use the information here as well as your own research on the Internet. After you ve done some reading and searching, include your own opinion somewhere on the poster (you could ask a few adults as well). Alternative poster: instead of an information-based poster, students can create a FOR or AGAINST poster. To do this they will need to understand the TPPA and then research the opinions of those either for or against it. To conclude, a discussion or debate on the TPPA and who is in favour, and who is not, may follow. Look for information to answer these questions: Which countries signed it, and when and where was it signed? How long was it in the making? What are some of the reasons it was controversial? What is the main idea of it? How will it help New Zealand? Are there any costs to New Zealand? The countries that signed the TPP: Main aim: To promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labour and environmental protections. Major criticisms: That it was all negotiated in secrecy Worries about intellectual property laws Costs of medicines could go up Gives lots of power to companies Some people are worried about lower environmental standards. Asking critical questions If you were in charge, what would you do differently? How might different people understand this issue differently? 1. Singapore 2. Brunei 3. New Zealand 4. Chile 5. United States 6. Australia 7. Peru 8. Vietnam 9. Malaysia 10. Mexico 11. Canada 12. Japan Campaign against the signing of the TPPA: And for the signing: Ministry of Foreign Affairs and Trade: MODULE 3 THE POWER OF POLICY PAGE 8

9 6) Important events in the recent history of Trade ISSUES [Slideshow Presentations] These images can be used to illustrate a timeline of trade events as shown on Slide of Trade Presentation Part 2. The key dates are also listed over the page. Trade OECD Countries OPEC Nations MODULE 3 THE POWER OF POLICY PAGE 9

10 Date Significant event 1944 The Bretton Woods Conference set out some proposals for international trading organisations Treaties created the World Bank and the International Monetary Fund (IMF) The International Trade Organization (ITO) starts. The first General Agreement on Tariffs and Trade (GATT) comes into effect IMF headquarters in Washington. D.C The OECD is formed to promote trade within its own group of nations 1964 United Nations Conference on Trade & Development (UNCTAD) to address concerns by developing countries 1970s OPEC and the oil shocks of the 1970s create new trading conditions 1982 The IMF make it difficult for developing countries and in 1982 Mexico defaults on its loans 1990s Many countries are concerned at the new trading blocs that make it unfair for others to trade 1995 World Trade Organization (WTO) is set up provide legally binding trade rules MODULE 3 THE POWER OF POLICY PAGE 10