Claudio's Group

WHAT ARE THE BENEFITS OF FREE TRADE?

The benefits of free trade are that it allows people in different market to gain access to more goods at a much lower prices. Free trades means that there would be no tariffs on goods imported into a country and thus would attract foreign firms to export their goods into local markets, allowing consumers to have a wide variety of goods to choose from. The increase in competition also forces the local firms to lower their prices in order to compete with foreign firms(which are usually big firms). Also without the tariffs, imported goods from overseas would be cheaper, making the good more affordable for consumers. Free trading also improves the relationship between the different nations that are trading with each other.

WHY ARE SOME COUNTRIES PROTECTING THEIR INDUSTRIES?
This is because increase in competition would force some local industries that are still in their infancy to close down. As the firms from overseas are usually big firms that are established and enjoys EOS, they are able to provide the same good with a higher quality and a lower price. In this manner, no one would consume the goods made locally and force the industry to shut down, increasing the unemployment rate and decreased revenues for the country's economy.
Another reason would be to prevent foreign firms from taking over the country's industry through dumping, which means selling their goods below cost price to drive out the local competition.

WHAT DO YOU THINK IS THE OBJECTIVE OF THE TRADE SUMMIT?
The objective of the trade summit is to discuss and agree on terms of trade that are fair and beneficail to all the countries. Take for example in the article, whereby farmers in Korea is being heavily sibsidized by the government, thus allowing them to export at a much lower price then other countries. The trade summit held in Hong Kong was to discuss whether the government should stop the heavy subsidies to the farmers, thus leading to strong protests from the Korean farmers.

HOW HAS IT ACHIEVED ITS OBJECTIVES? IF NOT HOW HAS IT FAILED?
The trade summit has achieved some of its objective in that they have provided freedom to African countries to allow them to trade, by abolishing the heavy subsidies to cotton farmers in the US and Europe, it will bring fair competition to all the farmers in the world as they would be on the same footing without the government's aid.

However, the summit has also failed in the sense that it failed to respond to the calls of all the countries' need and interest. Countries such as Brazil have threatened to walk out of the summit of their voices are continually ignored.


Claudio
Jianye
ChaoChing

freeweb qns

WHAT ARE THE BENEFITS OF FREE TRADE?

-big agricultural exporters will benefit
-wider consumer choice(cotton industries in Africa)
-open up market to foreign industries
-world output increase

Why are some countries protecting their industries?

-protectionism(infant industries) (farmers highly labour intensive, if unprotected, high lvl of unemployment will result)

What do you think, is the objective of the trade summit?
-prevent richer countries frm exploiting poorer countries

keet jas kel hh

1)Views and comments on free trade.

As mentioned in lectures, trade allows different countries of differentneeds to exchange resources. As such, smaller countries like Singapore withlimited resources can trade off its labour and technology for other productslike oil and food. Free trade allows no or little government intervention,as such a true reflection on absolute and comparative advantage can beshown. Therefore, countries can trade according to their respectivecomparative advantage, and not allow government subsidies to distort theircomparative advantage. Thus, countries and fully utilize the information oncomparative advantage and trade accordingly.However, with no government intervention, there could be trade ofundesirable goods. For example, there could be an overload of westerninfluence, thus causing locals to lose their cultural values. Also, therecould be a lack of support from locals to local companies and industries.Therefore, free trade could adversely affect a countries economy, posingmany threats and dangers.In conclusion, free trade has both benefits and disadvantages. Therefore, itcould be hard or almost impossible for any country to determine the correctvalues of free trade, but could only utilize this form trade to the best forits own.

2) Why are some countries protecting their industries?

They are afraid that larger foreign industries may enter their local marketand control it as they can sell their product at lower cost. Hence countrieswill protect their industries by placing high taxes on the foreignindustries or subsidies the local industries to enable to have an edge overthose foreign industries. This prevents the foreign industries fromcontrolling their local market and the local industries are able to survive.Usually infant industries will not have the capability to compete with thelarger industries. Hence countries will have to protect these infantindustries so that it will be able to survive and grow to be able to competewith the larger industries. However countries will tend to choose infantindustries with potential so as to put their revenue to good use.Certain countries want to preserve their traditional way of life. Hence,these countries will protect its industries to deter any foreign industriesform entering their countries so as to prevent this industries formdisrupting their traditional ways.

3)What do you think, is the objective of the trade summit?

Trade submit is a meeting of various countries coming together to discuss about terms and conditions pertaining to international trade. There are a few objectives of the trade submit. Firstly and most importantly it is to discuss and set fair terms of trade. Whenever there’s trade there must be terms along with it this will ensure that everything is fair. However, there are times where certain more economically stronger countries will try to take advantage of the economically less developed countries. As such this is where the trade submit comes in. During the trade submit, all the countries in the ‘union’ will meet and discuss these ‘unfair’ terms of trade. Those countries not involved will be the middle person and decide what is fair and what is not. With the trade submit the countries can also settle their differences amicably.
Another objective is to draft laws pertaining to trade. Only with law will there then be order. As such at the trade submit these laws can be discussed and drafted fairly.

4)How has it achieved its objective?

If not, how has it failed?It had met its objectives as it had brought together the nation¡¯s attentionon whether Hong Kong should open up to globalization. However, the main aimof the summit was on partially satisfied as they failed to come up with aconclusion, and the date for a firm ban on subsidies are yet to beconfirmed.
Eugene Tan Jason Tan Tay Junhong Brandon Lam

JR-CK-CT-LY

What are the benefits of Free Trade?
Free trade refers to the exchange of goods and services between two parties. Free trade brings about some benefits. As countries trade, it will also mean that consumers will have a wider range of products. They are now, able to enjoy greater variety of goods and services. When companies expand their output to cater for the rest of the world, they will also enjoy economies of scale that will now, allow them to lower the price of their products. Besides this, competitions from foreign companies will thus, keep domestic prices low. International trade will also foster better ties between countries.

Why are some countries protecting their industries?
Countries are protecting their industries to prevent negative impacts that foreign companies might cause. Firstly, industries such as infant industries require protection during their early stages of development so that they can develop and compete in the future. Infant industries also tend to lose out in face of more established foreign competitiors. In addition, countries have to protect their industries from being driven out by foreign firms through dumping. Dumping would lead to foreign control of the domestic market and thus, also causing a reduction in consumers' surplus.

Objective of trade summit
Countries such as South Korea have been enjoying subsidies by the government in the area of farming. Subsidies provided by the government would lower producers' cost of production. This will allow them to export their goods at competitive prices, threatening other countries' home market. Developing countries that do not enjoy such benefits felt unfairly treated. hence leading to the protest in Hong Kong.The objective of the trade summit is to resolve the above problem between the two parties by peaceful talks over the course of six days, addressing the issues raised by the different countries.

Has it achieved its objective?
It has met its objective of addressing only certain issues. Some problems still exist due to the different takes on the terms of trade.

Jun Ren

Chun Kin

Clement Tan

Lewis Yeoh

group 3: lisa, tricia, yoke leng, angeline


What are the benefits of Free Trade?
-lower prices of goods in the domestic market for consumer welfare.
-consumers also have a wide range of goods to choose from and higher quality products due to competition
- the people of the country also benefits in terms of wages and job opportunities. When labor and capital flow freely to the most productive areas of the economy, workers are employed in better, higher quality jobs with higher wages.
-keeps the domestic market in check, ensure that domestic firms maintain their competitivity

Why are some countries protecting their industries?
-providing help to infant industries because they cannot cope with competing with foreign firms which have already developed, reaped economies of scale and hence have stabilised
-new industries which have potential in bringing in revenue for the country in the long run
-prevent total retrenchment of workers in domestic industries

What do you think is the objective of the Trade Summit?
-to settle disagreements diplomatically
-mainly to help the poorest of the least developed countries: ending farm subsidies, not to allow foreign competition in the service industries, give duty free and quota free access to exports for the world's least developed nations, reduce tariffs
-to agree on something that the majority is happy with

How has it achieved its objective? If not, how has it failed?
-it has not succeeded because the developed countries have an upperhand over the developing nations in terms of having bargaining power
-several developing countries are still unhappy with the decision because their concerns are still not addressed
-the developing countries still feel that the developed countries are doing what they can so that they can gain from it, and the developed countries cannot understand why the former do not see their point of view, and instead are insisting they help them because they are 'poorer'. one suspects the other of having a superficial ulterior motive and the latter feels that the developing countries are using the reason that they are poor as an excuse for more.

comment for article ):

benefits of free trade
- more variety of goods due to imports
- prevention of monopolies in domestic market
- more efficient/ lower cost of production (enjoy economies of scale)
- promote international ties between countries
- trade according to countries' comparative advantage increases world output
- increased exports may increase sales and profits leading to more jobs in some sectors, thus creating more employment

reasons for protection of industries
- prevent foreign firms from "dumping" in the domestic market
- to allow industries to decline gradually
- promoting domestic employment
- protection for local producers because they cannot compete with cheap foreign labour
- military self sufficient

objective of trade summit
- to let all countries have a say in trade policies
- to come to a consent as to when to end policies that will have adverse effects on other countries
- to allow countries to listen to the views of other delegates

objective FAILED -why?
-richer countries refuse to comply with the terms while the poorer countries may ask for unreasonable terms
-unable to come to a compromise
- unable to consider the stand of other countries

this is not done by sl, zy, grace and ryl.

Attractive new models won't ease tough road ahead for GM

Source: Yahoo! News
Published: 15th January 2006

Struggling automaker General Motors got a major boost last week when it presented a host of new models that looked sharp enough to bring consumers back into their showrooms.
But a number of analysts have warned the world's largest automaker needs more than a few hot cars to resolve the serious structural problems that have led to multibillion dollar losses and a steady erosion of market share in North America.
"GM market share must continue to decline," Goldman Sachs analyst Robert Barry wrote in a recent research report.
"To maintain anywhere near a quarter of the market in a market with so many competitors, GM would need to make products that not only are as good as competitors' but so much better they have monopoly characteristics. We think that is almost impossible."
GM is suffering from its past success.
After having undergone a major restructuring following the entry of Japanese automakers into the domestic market in the 1980's, GM made billions in the 1990's and early part of this decade off its highly profitable sports utility vehicles.
The success of the SUVs allowed GM to neglect its small cars which were sold at such rock-bottom prices that their main financial contribution came from the loans consumers took out to buy them.
When competitors came out with smaller, car-based crossover SUVs, GM saw its market share erode. And when gas prices soared, GM saw its sales of gas-guzzling SUVs tank.
In November, GM announced plans to reduce its excess capacity in North America by one million vehicles through the closure of 12 facilities and the elimination of 30,000 jobs.
The savings associated with those layoffs are going to be limited by the peculiarities of GM's contract with the United Auto Workers' union.
Most laid-off employees who do not accept early retirement packages will be transferred out of the plants and into retraining facilities where they will collect 90 percent of their pay and full benefits.
Neither the automaker nor the union likes to talk about the jobs bank program, which is currently estimated to support about 5,000 employees. Some estimate the program could cost GM more than 630 million dollars a year once the layoffs are complete.
"The big thing that would help them is the elimination of the jobs banks, but I don't see the UAW agreeing to it," Brian Ropp, an auto analyst with T. Rowe Price in Baltimore, Maryland, told AFP.
GM chairman Rick Wagoner recently indicated that he believes the union will be willing to make significant concessions in the 2007 contract negotiations.
"I think the UAW is well informed on the situation," he told reporters on the sidelines of the North American International Auto Show in Detroit last week.
"This is a union that, in the middle of a contract, sat down and negotiated (a health care agreement) that reduced our liability by 15 billion dollars," he said.
The three billion dollars in annual savings associated with that agreement will do much to bring GM's costs per vehicle in line with its foreign competitors.
GM's largest private shareholder warned last week those savings won't be enough.
Jerry York, an advisor to investor Kirk Kerkorian's Tracinda Corp. which holds a 7.8 percent stake in GM, said the automaker is currently burning through 24 million dollars per day.
He told analysts Wednesday that GM must cut its shareholder dividend, executive salaries and brand structure if it hopes to return to profitability.
He said the automaker must change its mindset to operate in "crisis mode" and recognize the challenges it faces in the coming months.
On Friday, GM tried to reassure investors that it is moving quickly to implement its restructuring plan.
GM's chairman told analysts that the company was on track to cut 4 billion dollars in operating costs in 2006 and was aiming to reduce global structural costs to 25 percent of revenue in 2010 from the current level of 34 percent.
"We expect to see improved results in 2006 and further progress in 2007," Wagoner said.
Meanwhile, GM continued to post strong results outside of its domestic market which helped push global sales up two percent in 2005 to 9.17 million cars and trucks, marking only the second time since 1978 that the world's largest automaker has sold more than nine million vehicles in a year.


From the article we can clearly see the effects of over-expansionism of the firm. GM has clearly grown beyond the theoratical optimum point where average cost is lowest and is suffering from diseconomies of scale. As a result, it is no longer as profitable as it was years ago, when the demand for vehicles was high, justifying the need for higher levels of production. Thus, it is now neccessary to restructure itself to reduce administrative costs and to lower production by shutting down plants.

The article also shows the need for protectionism. The entrance of cheaper Japanese vehicles had led to a gradual loss of GM's market share in domestic markets. This is further amplified as fuel prices continue to soar and thus the need for Japanese vehicles that generally consume less fuel. Protectionism would call for tariffs and trade quotas imposed on these Japanese goods to push their prices higher and give domestic producers such as GM a "fairer" battleground. In doing so, the US government would be able to allow domestic producers to decline gradually, offering more time for firms to retrain workers for other jobs.

Ground Rules

Hi guys. This is the econs blog that we got to do to improve our essay and case study skills. Actual instructions are on COL@C. Basically just no foul language, no perverse content and no spitting. I guess smoking is allowed (but in the smoking areas only), however this blog is not one of them. We all need good, solid posts and comments for this blog to work.

I'll be doing the first piece of work, but you guys will be given the opportunity to express yourselves in the next few pieces.




P.S. I'll try to get two tag boards, one for formal matters and the other for all miscellenous stuff.