,

INTERNATIONAL TRADING SYSTEM

The international trading “system” comprises many thousands of unilateral,
bilateral, regional, and multilateral rules and agreements among more than two
hundred independent nations. Atop this complex and rapidly evolving mass of political
and economic arrangements is the World Trade Organization (WTO).

“SILK ROAD”-a network of pathways in

the ancient world that spanned from China
to what is now in the Middle East and
Europe.
The General Agreement on Tariffs and Trade
- The GATT was an agreement rather than a full-fledged
international organization and had “contracting parties” rather
than members. The primary goal of the GATT was to promote
non-discriminatory trade liberalization. The fundamental
guidelines were non-discrimination (most-favoured-nation
treatment among signatories), reciprocity, and transparency.
And it was set up to eliminate protectionism, get countries
trading freely among themselves, and help restore economic
prosperity following the devastation of World War II.
The General Agreement on Tariffs and Trade
- The GATT initially focused almost entirely on trade in
manufactured goods, i.e., goods that were then exported
mainly by the developed countries, and GATT rules for poor
countries were mostly the same as those for rich countries.
However, developing countries were accorded special
treatment through exemptions from some rules, e.g.,
permission under Article XVIII to use tariffs and quotas to
promote an infant industry or to deal with balance of
payments problems.
 WHAT IS GOLD STANDARD?
The countries established a common basis for currency prices and
a fixed exchange rate system-all based on the value of gold.
During World War I, many were forced to abandon the gold
standard since European countries had low gold reserves; they
adopted currencies that were no longer redeemable in gold.
Returning to a pure standard became more difficult as the global
economic crisis called “Great Depression-started during 1920-
1930 (further emptying government coffers”.
 WHAT IS GOLD STANDARD?
Economic historian BARRY EICHENGREEN argues
that the recovery of the US really began when, having
abandoned the gold standard.
Today, the world economy operates based on what are
called fiat currencies- this system allows governments
to freely and actively manage their economies by
increasing or decreasing the amount of money in
circulation as they see fit.
 WHAT IS BRETTON WOODS SYSTEM?
- a set of unified rules and policies that provided the framework
necessary to create fixed international currency exchange rates.
Delegates at Bretton Woods agreed to create 2 financial
institutions:
1. International Bank for Reconstruction and Development (IBRD)-
World Bank; to be responsible for funding post-war reconstruction
projects.It was a critical institution at a time when many of the world’s cities
had been destroyed by the war.
2. International Monetary Fund (IMF) -it was to be the global
lender of last resort to prevent individual countries from spiralling into
credit crisis.
 WHAT IS NEOLIBERALISM?
"Neoliberalism" is contemporarily used to refer to market-
oriented reform policies such as "eliminating price controls,
deregulating capital markets, lowering trade barriers "and
reducing state influence in the economy, especially through
privatization and austerity.Also deals with the reductions in
government spending in order to increase the role of the
private sector in the economy and society.
 NEOLIBERALISM AND ITS DISCONTENTS
Global Keynesianism came in the mid-1940s-1970s.
During this period, governments’ poured money into their economies,
allowing people to purchase more goods and, in the process, increase
demand for these products.
In the early 1970s,however, the prices of oil rose sharply as a result of
the Organization of Arab Petroleum Exporting Countries(OAPEC)
imposition of an embargo in response to the decision of US and other
countries to resupply the Israeli military with the needed arms during the
Yom Kippur War.
Arab countries also used the embargo to stabilize their economies and
growth.
The “oil embargo” affected the Western economies that were reliant
on oil.
The result was a phenomenon called STAGFLATION-decline in
economic growth and employment (stagnation) takes place alongside
a sharp increase in prices (inflation).
Friedrich Hayek & Milton Friedman argued that the government’s
practice of pouring money into their economies had caused inflation by
increasing demand for goods without necessarily increasing supply.
It resulted to Washington Consensus which dominated global
economic policies from 1980s-2000s. On this, they implement radical
policy reforms to address the problems they are experiencing.
(Openness)
History of Global Politics: Creating an International Order
Global politics, also known as world politics, names
both the discipline that studies the political and economic
patterns of the world and the field that is being studied. At the
center of that field are the different processes of political
globalization in relation to questions of social power. The
discipline studies the relationships between cities, nation-
states, multinational corporations, and international
organizations. Global politics is said by some to be
distinct from the field of international politics.
ATTRIBUTES OF TODAY’S GLOBAL SYSTEM
The world today has four key attributes:
1. There are countries or states that are independent and
govern themselves.
2. This country interacts with each other through diplomacy.
3. There are international organizations, like the UN that
facilitate these interactions.
4. Beyond simply facilitating meetings between states,
international organizations also take on lives of their own.
WHAT ARE THE ORIGINS OF THIS SYSTEM?
STATE In layman’s term, NATION emphasizes the
state refers to a country organic ties that hold groups of
and its government.” people together and inspire a
sense of loyalty and belonging.
Characteristics: Characteristics:
POPULATION CULTURE
GOVERNMENT LANGUAGE
SOVEREIGNTY ETHNICITY
TERRITORY RELIGION
THE INTERSTATE SYSTEM
- It is one side of the many sides of
contemporary political globalization
that seeks collaboration among nation-
state through the establishments of
Intergovernmental Organizations.
INTERGOVERNMENTAL ORGANIZATIONS (IGO)
AIM: foster the different dimension of Globalization. All IGOs
serve purposes based on the common interest of their
member-states that is deemed beneficial to all parties
involved.

ASEAN (1967) NATO

Association of Southeast North Atlantic Treaty
Asian Nations with 10 Organization
members By: Jens Stoltenberg
THE INTERSTATE SYSTEM
1.) The origins of the present day concept
of sovereignty can be traced back to the
Treaty of Westphalia, which was set of
agreements signed in 1648 to end the
30years War between CATHOLICISM and
PROTESTANTISM.
2.) The Westphalian system provided
stability for the nation of Europe, until it
faced its first major challenge by Napoleon
Bonaparte. - believed in spreading the
principles of the French Revolution liberty,
equality, and fraternity to the rest of Europe,
and thus challenged the power of kings,
queens, and religion in Europe.
3.) The freedom of expression pioneered by
Napoleon was also known as a
NAPOLEONIC CODE.
4.) Napoleon encourage freedom or religion
(you choose) and promoted meritocracy in
government (you get hired if you are
qualified)
5.) Anglo and Prussian armies defeated
Napoleon in the battle of Waterloo in 1815,
ending the latter’s mission to spread his liberal
code across Europe.
6.) Since people already had taste of freedom,
the royal powers created a new system that, in
effect, restored the Westphalian system.
7.) The Concert of Europe was an alliance
of “great powers”- the UK, Austria, Russia
and Prussia - that sought to restore the
world of monarchical, hereditary, and
religious practices in the past. Authored by
Klemens Von Metternich.
The first thinker to reconcile nationalism with liberal
internationalism was the 19th century Italian patriot
Giuseppe Mazzini.
He forwarded the principle of self-determination-the
belief that the world’s nations had a right to a free and
sovereign government hoping that these free nations
would become democracies.
Means of Production - the capitalist refereed to the owners
of factories, companies and others