Question

After reading Chapters 7 and 8, conduct research on GATT, WTO, and NAFTA. First, explain what GATT and WTO do for countries around the world. Then go onto elaborate on NAFTA, the countries involved, and what proposed changes Trump has suggested be made to the agreement. Be sure to provide the history of these agreements and why they came to be. Finally, provide details as to who are the true winners and losers in the NAFTA agreement even though its initial intention was to ensure the equality of all countries involved.

Next, do a bit of research and highlight why China has taken such an interest in investing in Africa. Is it because of the resources Africa has, the potential relationships that can be formed, or something else? Your text states that resources and even proximity play roles in why some countries participate in FDI with other countries. Why is there hesitation and criticism for China heavily investing in Africa? What type of impact do some think will occur for those countries in Africa that are receiving the FDI? Do they think it will be positive or negative? Why?

Answer 1

The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas.

The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible.

The North American Free Trade Agreement (NAFTA) is a treaty entered into by the United States, Canada, and Mexico; it went into effect on January 1, 1994. (Free trade had existed between the U.S. and Canada since 1989; NAFTA broadened that arrangement.) On that day, the three countries became the largest free market in the world-;the combined economies of the three nations at that time measured $6 trillion and directly affected more than 365 million people. NAFTA was created to eliminate tariff barriers to agricultural, manufacturing, and services; to remove investment restrictions; and to protect intellectual property rights. This was to be done while also addressing environmental and labor concerns (although many observers charge that the three governments have been lax in ensuring environmental and labor safeguards since the agreement went into effect). Small businesses were among those that were expected to benefit the most from the lowering of trade barriers since it would make doing business in Mexico and Canada less expensive and would reduce the red tape needed to import or export goods.

TheUnited States of America are the biggest winners from NAFTA since American business interests have often expressed great satisfaction with the agreement. Trade has grown sharply between the three nations who are parties to NAFTA but that increase of trade activity has resulted in rising trade deficits for the U.S. with both Canada and Mexico-;the U.S. imports more from Mexico and Canada than it exports to these trading partners.

Economic growth in Sub-Saharan Africa (SSA) has averaged roughly 5 percent per year over the past decade, improving living standards and bolstering human development indicators across the continent. Stronger public institutions, a supportive, private sector–focused policy environment, responsible macroeconomic management, and a sustained commitment to structural reforms have greatly expanded opportunities for countries in SSA to participate in global markets. In recent years, many countries in the region have benefited from an increasingly favorable external environment, high commodity prices, and an especially strong demand for natural resources by emerging economies, particularly China. China-SSA trade has rapidly intensified since the late 1990s and in 2013 China became SSA’s largest export and development partner. China now represents about a quarter of SSA’s trade, up from just 2.3 percent in 1985. About one-third of China’s energy imports come from SSA—a vital trade link, especially as energy consumption rates in China have grown by more than twice the global average over the past 10 years. Despite increased efficiency and rising domestic production, rapid urbanization and heavy industrialization continue to spur robust Chinese demand for coal, oil, and natural gas. China’s banks, notably the People’s Bank of China, the China Development Bank, and the Export-Import Bank of China, have supported large-scale investments in African infrastructure. More than 2,200 Chinese enterprises are currently operating in SSA, most of them private firms. Diplomatic contacts and bilateral aid and cooperation initiatives have greatly expanded,1 and the Forum on China-Africa Cooperation, formed in 2000 and convened every three years, has become the primary institutional vehicle for China’s strategic engagement with SSA.This is the sole reason why China devoloped a tie with Africa.

Critisism for China investing in Africa are because it is thought,

1. Infrastructure Financing is the Only Game in Town
2. Beijing Orchestrates All BRI Investment Activity

3.African Governments are being Swindled by Beijing

China's impact on Africa has been mixed.There has been a substantial growth in the relationship between China and Africa. The Chinese strategy is working for both parties in many ways, especially in investment, foreign aid and debt forgiveness. This is impressive given the very different cultures and agendas of these countries. Chinese investment has not, yet, begun to rival western investment, but that in no way diminishes the significant strides that have been made and there seems to be a commitment to continue this forward momentum.From an African perspective, Chinese investment has been good in many situations, but as with other investments it comes with a substantial price. The price includes dominance of local culture and considerations.It has also negatively impacted local trade and commerce. In some cases, African labor has not benefited from Chinese investment. Finally, Chinese investment has propped up some rogue regimes.It is too early to tell if the world-wide recession has negatively affected Chinese investment. Clearly, the Chinese have a strong track record of investing in Africa and rhetorically they support continued development. As more data becomes available, it will be very interesting to see if there are any changes in these patterns. Theoretically, Dunning’s economic framework seems to do a good job of predicting Chinese investment. A clear example of this is in extraction industries. The Chinese are especially concerned about oil. The addition suggested here is the addition of the influence of the Chinese government to the decision making process