Friday, May 1, 2015

Made In The World Products And Multiregional Trade Agreements

Production by multinational corporations makes extensive use of cross national supply chains.  For example, Apple's smart phones are assembled in China using parts that are produced in a number of countries outside of China. The Apple smartphone is a classic example of a "made in the world" product. If the US imposed tariffs on smartphones imported from China, that would decrease the profit on Apple smartphones in the US.  Consequently, multinational corporations have an incentive to lobby for preferential tariffs on their products which are made elsewhere and imported into the US.  According to this article,  made in the world production is one of the reasons for multi-regional trade agreements like the Trans Pacific Partnership.  It argues that made in the world production limited the use of tariffs and other restrictions on imports during the recent recession.

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