COPYRIGHTED MATERIAL
Engage students in a discussion: HnnH has a lot of problems in Glucosia. Are sales there doomed? Are Glucosia’s government tactics fair? What can be done? Take guesses. Tell students they’ll soon be able to answer these questions. Communicating Objectives At the conclusion of the lesson, you will be able to trace the evolution of free trade from GATT to the World Trade Organization, and list the benefits and barriers to free global trade. You will be able to summarize seven major regional free trade agreements and proposed agreements which shape global commerce, and list the goals and principles of the WTO. Recently, the Glucosian government advised HnnH that it must obtain a special medical product sales license to do business in their country. Currently there is a two year wait for such a license. HnnH management has decided “if you cant beat ‘em, join em!” It will open a manufacturing plant in Glucosia. That will eliminate the so-called opportunity fee, and resolve the poor port position predicament. Unfortunately, it looks like HnnH’s plans have been thwarted again. The HnnH manufacturing equipment is highly specialized. It must be made by HnnH in the U.S., shipped to Glucosia, assembled and installed there. The Glucosian government has told HnnH that if it wants to manufacture in their country, it may do so only with equipment made in Glucosia by Glucosians. That is impossible, so it looks as if HnnH’s sales may be doomed in Glucosia. PRODUCT PREVIEW The Glucosian government, however, has other ideas.You see, Glucosia has a startup healthcare industry. Several local companies manufacture products similar to HnnH’s. The government is proud of its local businesses and wants their companies to profit, particularly within their home country. To help them out, the government charges an “opportunity fee” on similar health care products imported into the Glucosia by non- Glucosian companies. Naturally, this makes HnnH’s products more expensive than the local products. Given a choice, even indulgent Glucosians will buy the less expensive ones. The Glucosian government has also limited the quantity of products that HnnH may ship into their country, and denied HnnH’s cargo ships access to the main port. HnnH’s Shipments must be unloaded at a small port 100 miles to the north, then trucked over the mountains into the main city. This is an expensive process which reduces the profit on HnnH’s products.
Presentation of Content GATT Gets Going
Here we go again, back to WWII. By now you might have noticed that a lot of important institutions of global commerce came about as a result of the reconstruction of the world’s economy after WWII. (Recall The World Bank, and European Economic Community, predecessor to the EU.) Following WWII, many countries cooperated with one another to get the world back on its feet and to create, monitor, and enforce policies that would promote global
317 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY
Made with FlippingBook flipbook maker