Unit 4: World Trade Organisation (WTO)

The main activities of the WTO are as follows:

1. Reducing or eliminating trade barriers through negotiation and agreeing on rules of international trade relating to matters such as anti-dumping, subsidies and product standards.
2. Administering and monitoring the application of the WTO's rules for trade, goods, services and intellectual property rights.
3. Monitoring and reviewing the trade policies of members and ensuring that trade agreements are clear and well documented.
4. Settling trade disputes between members.
5. Helping new members to join. There are currently (2012) 30 countries which are yet to join.

Criticisms of the WTO

Despite good intentions, it does face serious criticism. This comes from the anti-globalisation bodies and environmental groups. The issue focus on the following:

It is undemocratic: WTO rules are written by corporations, therefore consumers, welfare groups, environmentalists, human rights and labour organisations are often ignored. For example, the WTO has ruled it illegal for a government to ban hoew a product is produced, such as with child labour.

It is destroying the environment. For example, the first WTO panel ruled that the US Clean Air Act, requiring domestic and foreign firms to produce cleaner gasoline, was illegal. (It will be interesting to see what they make of the EU Airline tax)

It favours wealthy nations over poor ones. For example, often, negfotiators from poorer countries are not even invited to meetings!. Agreements are then announced that poor countries didnt even discuss. Many poor countries don't have the qualified staff. Many don't have a permanent representitive on the WTO.

It is increasing poverty klevels in poorer countries. Farmers produce enough food to feed everyone. However, corporate control of food distribution means that an estimated 800 million people worldwide suffer from malnutrition.

Unit 4: Exchange Rates

Yen hits seven-month low after Bank of Japan measures

The Japanese yen fell to its lowest level against the US dollar in seven months, a respite for worries over the strong yen hurting exports and the economy.

Part of the reason for the fall is the Bank of Japan's surprise increase of its stimulus measures.
The yen has fallen by 3.7% against the greenback since the 14 February move.

A strong yen has hurt profit outlooks for Japanese manufacturers, with some focussing on overseas production.

Other firms had used to strong yen to go on buying sprees overseas.

The dollar stood at 80.30 yen on Thursday, having risen to 80.406 overnight - its highest since July.

The Bank of Japan (BOJ) expand its asset purchase programme by 10tn yen ($130bn; £83bn) in an effort to boost growth.

The BOJ also left the cost of borrowing unchanged at between zero and 0.1%.

The BBC's Tokyo correspondent Roland Buerk says another factor is the strengthening of the US dollar, after better than expected economic data out the US.

But he says the yen's decline may not alleviate the troubles of Japanese businesses just yet.

"Back in 2007 the yen was at 117 to the dollar not 80 like it is today, so while some depreciation like this is welcome it probably doesn't go far enough for exporters."

Carmakers, such as Toyota, Honda and Mitsubishi, have been some of the worst hit by the strong yen as it makes their products less competitive abroad.

Unit 2 & 4: Long Term Unemployment

Click here to see 10 examples of people in the US who once found their skills in great demand but for various reasons once the bubble burst they have found it impossible to find work again and so join the increasing ranks of the long term unemployed.


It's useful for students to understand that it is not just factory workers who are losing their jobs in droves and the social problems that arise the longer people remain out of work afflict everyone regardless of qualifications and experience. One lady, who suffers from panic attacks, talks about how she used to have to turn down jobs, "When things were good, she worked at some well-known firms in New York's Financial District, including Lehman Brothers, yet no one will hire her now because she isn't as young as the new college graduates."

The clip below, 'Tees Street Isn't Working' is a series from the 1980s recession. It illustrates the effects of long term unemployment.  It is as relevant today as it was back then.



A more recent clip which highlights the real issue with being long term unemployed....

North of England Correspondent, Morland Sanders, has been to County Durham to meet one man who has written 1500 job applications in the last 12 months. .heartbreaking!!





Part 2.....



Part 3....

The UK has had a large deficit on the Current account balance of payments for well over a decade. Discuss any relevant policies to reduce its deficit, both in the short and the long term.

(30 Marks)

Resources: This blog, text book, internet.

I want you to include application points from articles you have read from the blog.

Finish it by end of lessons today (or for H/K tomorrow)

Unit 4: Trade Deficit in Japan

Japan's trade deficit hits record high on fuel imports

Japanese carmakers have been among the worst hit by a strengthening yen and natural disasters








Continue reading the main story Related StoriesJapan's cabinet approves tax riseJapan economy worse than forecastJapan PM Noda in tax reform call

Japan's trade deficit surged to a record high in January as a strong yen hurt exports and its nuclear crisis resulted in increased fuel imports.

The deficit stood at 1.5tn yen ($19bn; 12bn) as exports dipped 9.3% from a year earlier, while imports rose 9.8%.

Fuel imports went up because most of its 54 nuclear reactors were shut after the earthquake and tsunami last March.

Japan has also been hurt by a slowdown in its key export markets such as the US and the eurozone.

"Special factors such as the earthquake last year, the nuclear problem and a temporary slowdown in the global economy as well as Japan's new year holiday came together and pushed down the trade balance," said Takeshi Minami of Norinchukin Research Institute.
Nuclear impact

Continue reading the main story “Start QuoteImports are likely to remain high due to solid demand for imports of fuel for electricity and brisk imports of parts”
The earthquake and tsunami on 11 March last year caused substantial damage to the Fukushima Daiichi nuclear plant, resulting in radiation leaks at the facility.

Some 80,000 people had to be evacuated from the surrounding areas. The leaks have raised concerns about the safety of nuclear energy in the country.

As a result the majority of Japan's nuclear plants have been shut and utility providers have had to turn to traditional thermal power stations to generate electricity.

These power plants need natural gas and coal to operate, resulting in a surge in imports of these commodities.

Imports of natural gas surged by 74% in January from a year earlier, while coal imports rose more the 26%, Japan's Ministry of Finance said.

Double whammy?

Japan's exports have been hurt by a strong yen, which has risen more than 7% against the US dollar since April last year.

A strong currency makes Japanese goods less attractive to foreign buyers as they have to pay more for them.

Analysts also say that a strong yen had resulted in Japanese firms sourcing more parts from outside Japan, which had resulted in increased imports and impacted the trade deficit.

They said this trend was likely to continue in the short term.

"Imports are likely to remain high due to solid demand for imports of fuel for electricity and brisk imports of parts," said Yoshimasa Maruyama of Itochu Economic Research Institute.

"Taking these factors together, a trade deficit will persist at least through the first half of this year, and how it narrows will largely depend on the recovery of overseas economies such as those in emerging markets in Asia."

Unit 4: Essay Question

Homework question for Tuesday 21st

The value of the pound fell from £1 = €1.47 in May 2007 to £1 = €1.18 in November 2008. Examine the factors which might explain this depreciation of sterling against the euro. (20 Marks)

Unit 3: Abu Dhabi hotels in price wars!

Hotel price wars 'bad for business' in Abu Dhabi

The company that manages Abu Dhabi's biggest hotel has warned against five-star properties cutting their rates in the face of increased competition, amid fears that price wars in the capital could deepen.


Six luxury hotels have opened in the capital over the past few months and more will launch in the coming months, fuelling concerns that profitability, which has already fallen sharply, could decline further.

"The price war exists," said Ali Hamad Lakhraim, the president and chief executive of Millennium & Copthorne Hotels for the Middle East and Africa, which operates the Grand Millennium Al Wahda in the capital. "In some cases you have five-star hotels competing with three-star prices. This is mainly created by general managers trying to fill hotels." Profitability has already fallen by 50 per cent from peaks in 2008 for many UAE hotels because of the global economic downturn and new supply, Mr Lakhraim said.

"General managers need to be well controlled, either by their companies or by their owners," he said.

"If a hotel which is 10 years old has to compete with a brand-new, newly opened hotel at the same level, the competition is not there really because the guest will probably choose the new hotel."

But Mr Lakhraim admits his company is also likely to be guilty of being dragged into the price war.

"In some cases I will have to cut prices as well, if I have to survive … For others who are opening new - they don't have clients, they don't have the loyalty or the people who are used to the hotel, and their depreciation and costs are very high. They can go and start harming the market, but then they wake up and realise that this is wrong, because it doesn't cover their expenses."

Hotels that have opened recently in Abu Dhabi include the Jumeirah at Etihad Towers and a Westin resort at Abu Dhabi Golf Club. Properties slated to open this year include the brand names Ritz-Carlton, Sofitel and the Anantara Eastern Mangroves hotel.

Philippe Anric, the general manager of the Centro Al Manhalin Abu Dhabi, a three-star hotel that opened in November, says that hotels in the city are having to compete much harder for business.

"It can be a challenge if some hoteliers start to panic," he said. "I'm afraid about the domino effect, where everybody is going to start to reduce the price - the five-star starting to chase the market of the fours and the fours starting to chase the threes. I hope it's not going to happen."

Analysts said the new supply would prompt many hotels to review various options to compete.

"It's a real conundrum," said Gavin Samson, the director for the hospitality property advisory firm Christie + Co, Mena. "The fear of both owners and operators is that obviously when new supply comes to the market in Abu Dhabi and Dubai's case - but particularly Abu Dhabi at the moment - these properties are driven by the need to generate revenue and to get market share and drive occupancy so they are going to reduce rates.

"The dilemma for the older properties is how do you compete with the brand-new boys on the block? Reduce room rates … or you have to consider the question of do I refurbish, do I reposition, do I take on another brand?"

Questions for discussion:

Is this price war good for consumers?