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This chapter examines the effect of international trade on labor conditions around the world. Evidence developed in the chapter shows that open trade policies improve working conditions by raising per capita income, as international trade theory predicts. Countries with open trade policies also have superior labor rights, and labor rights improve over time in countries that adopt open trade policies. In the short run, trade clearly enhances the working conditions of workers in export industries (including those working in export processing zones) but threatens the conditions of workers whose companies compete with imports. The evidence shows that with the passage of time, all workers benefit by moving into more productive employment settings. The evidence in this chapter implies that trade sanctions are likely to worsen labor conditions in target countries.

This final chapter summarizes the findings of the earlier analyses of the impact of globalization on labor conditions and considers the principles that should inform future policies to improve labor conditions. Broadly speaking, the evidence indicates that international trade, international migration, and the activities of multinational companies generally advance working conditions and labor rights around the world. In contrast, some policy proposals, such as the use of trade sanctions against countries that do not adopt international labor standards, are likely to worsen rather than improve labor conditions. A very useful guide to policy choice is to favor policies that expand, rather than contract, opportunities for target groups. The chapter reviews a number of targeted incentive policies that satisfy this principle in general and in particular areas such as child labor and forced labor.

The striking puzzle at the heart of international lending has long been known as the “enforcement problem” of cross-border debt contracts: clearly there is some kind of cross-border enforcement at work, but the precise mechanism through which it operates is not immediately observable, and economists still do not understand how exactly it works. This chapter discusses the four conventional explanations of debtor compliance found in the economics literature, and assesses their validity in light of the available evidence. The four explanations center on (1) the borrower's long-term reputation; (2) legal and trade sanctions; (3) democratic institutions; and (4) spillover costs.

The failure of the Hosokawa summit led some officials to worry about the very future of the U.S.‐Japan relationship. Most observers believed that Japan would eventually compromise, as it could not afford a break with its most important ally. In addition, American exasperation with Japan reached a peak in the mid-1995, leading the U.S. to threaten sanctions against Japanese autos if the Japanese government did not compromise on the final remaining issue, trade in autos and auto parts. But the Japanese surprised everyone by maintaining its hard‐line stance to the end of the Framework negotiations. This was due not only to Japan's resentment at America's heavy‐handed trade pressures, but also to its aversion to the revisionist paradigm and all it represented. In the end, it was the U.S. that backed down, accepting a final agreement that bore little resemblance to the results orientation it had initially desired.

Trade related intellectual property right regime (TRIPS) has made it virtually impossible to industrialize and emerge as manufacturing exporter through reverse engineering and imitation that many of today's successful countries had adopted at their initial stages of industrialization and growth. On the other hand, environmental standards and pollution abatement costs have eroded much of the comparative advantages that the developing countries may have in the production of dirtier goods due to abundant and cheap labour. Labour standards and prohibition of the use of even cheaper child labour in production of export goods have the same effect. This chapter discusses different dimensions of these new rules and institutions of the world trade, and how in many instances these rules are actually creating a new divide in the world trading order.

This chapter proposes an agenda to deal first with the United States' pollution and second with that of developing countries. It suggests that the way to get nations, and particularly the United States, to reduce CO₂ emissions significantly is to use trade sanctions. The United States, and implicitly other nations who are doing little to curb emissions, are unfairly subsidizing their exports by not forcing manufacturers to pay the full cost of emissions. To avoid trade sanctions, nations should tax carbon emissions to reflect the long-term social cost of emissions. If trade sanctions could be used this way, one nation might force another to tax its emissions, not necessarily because it cares about the environment, but for the myriad reasons that a nation seeks to raise the cost of other nations' exports.

Despite a dramatic growth in agricultural trade between the United States and Cuba, trade between these two states has been “one-way trade,” primarily due to U.S. economic sanctions. A new scenario could potentially emerge as diplomatic and trade relations between the United States and Cuba improve and are eventually normalized. These changes could facilitate the expansion of U.S. agricultural and food exports to the island, as well as Cuban exports to the United States. This chapter examines the evolution of U.S. agricultural exports to Cuba since the approval of the Trade Sanctions Reform and Export Enhancement Act (TSRA) in 2000. The future prospects and policy implications for U.S.-Cuba agricultural trade are also discussed, taking into account the shift in U.S–Cuba relations initiated after December 17, 2014.

The first chapter details the nature of sovereign debts. The sovereign nature of the issuer has an enormous impact in terms of risk. At the very least, one may argue that sovereign bonds have a split personality in terms of risk. Indeed, debt issued by a government can be considered as either the safest financial asset or one of the riskiest. This chapter details the incentives governments have to repay their debts. It further shows the difference between default and repudiation. When states default they declare themselves unable to repay their debts. In the case of repudiation the legality of the debts is questioned. The difference is especially relevant in the Russian case as the Soviets decided to repudiate the Tsarist debts to mark a clear break with the previous regime. The chapter ends by detailing how the nature of lenders may affect negotiations and reimbursement.

This chapter is part of the general literature on insecure property rights and their consequences for economic efficiency. The literature points out that there are other modes of expropriation or partial expropriation beyond merely taking over the firm. Sharp rises in taxation play this role, and so do regulations that say labor must be paid far above its competitive wage. In this literature, the tools of modern contract theory have opened the door for analyses of contracts that are optimal given unavoidable expropriation risk should certain conditions arise. Since one of the prime factors promoting expropriation is higher net returns to the government if the asset is in its hands, counter-threats may prevent expropriation in a number of instances. Therefore, the country whose firm has been expropriated can retaliate by blocking assets or imposing trade sanctions or other forms of international pressure.