INTERNATIONAL TRADE Essay Example | Topics and Well Written Essays - 2000 words

INTERNATIONAL TRADE - Essay Example China’s trade growth virtually exploded during the recent years. (Brainard, 1990, 327 & 328)   Ã‚  There are different factors propelling world’s merchandise trade to this level over the years. Four most significant factors may be mentioned here. Firstly, the recent Information Technology Industry boom has really worked as a major push towards achieving this kind of extraordinary trade growth. Throughout the 1990s, the office and the telecommunication equipments were considered under the most dynamic product category traded. Although the industry was not successful in exceeding its previous export level in 2000, a rise of 10 percent was realized amounting to nearly 770 billion US$. (WTO NEWS: PRESS RELEASES, 2000; WTO NEWS: PRESS RELEASES, 2004). The tremendous rate was accentuated by the sales of mobile phones and semi-conductors. The second factor that aided prospective trade growth rate is Reduction in Tariff. In October 2002, Chairman of the NAM Board of Directors Trade and Technology Policy, Harold Wiens stated that over 70 percent of the merchandise trade con sisted of manufactured goods. Multilateral trade negotiations have been significantly effective in bringing about reductions in tariff in most of the industrial nations, but the policies of many of the LDCs regarding the tariff and non-tariff trade barriers are yet to be revised. Since 1950, the import tariffs in U.S. dropped from 6 percent to 1.5 percent, with the average rate slumping from 8.6 percent to 3.2 percent from1960 to 1995 worldwide. Thirdly, transportation cost, as a result of the tariff reductions, forms a substantial part of the total trade costs. â€Å"In 2000, aggregate transportation expenditures for major Latin America countries were two to four times higher than for the United States. (source: author’s calculations based on US Imports of Merchandise; ECLAC BTI data)† (Hummels, n.d., 7). The ad-valorem duties are based on the distance of the goods to be