Invisible Barriers to Invisible Trade

195 Pages·1975·15.073 MB·English

by  Brian Griffiths (auth.)

INVISIBLE BARRIERS TO INVISIBLE TRADE
Also published for the Trade Policy Research Centre
by Macmillan
TOWARDS AN OPEN WORLD ECONOMY
by Frank McFadzean et al.
WORLD AGRICULTURE IN DISARRAY
by D. Gale Johnson
THE ESSENTIALS OF ECONOMIC INTEGRATION
by Victoria Curzon
NEGOTIATING ON NON-TARIFF DISTORTIONS
OF TRADE
by Robert Middleton
INVISffiLE BARRIERS TO
INVISIBLE TRADE
by
BRIAN GRIFFITHS
Palgrave Macmillan
ISBN 978-1-349-02657-9 ISBN 978-1-349-02655-5 (eBook)
DOI 10.1007/978-1-349-02655-5
© Trade Policy Research Centre 1975
Softcover reprint of the hardcover 1st edition 1975 978-0-333-18533-9
All rights reserved. No part of this publication may be
reproduced or transmitted, in any form or by any means,
without permission.
First published 1975 by
THE MACMILLAN PRESS LTD
London and Basingstoke
Associated companies in New York
Dublin Melbourne Johannesburg and Madras
SBN 333 18533 1
Typeset by
COLD COMPOSITION LTD
Southborough, Tunbridge Wells
Trade Policy Research Centre
London
The Trade Policy Research Centre in London was established
in 1968 to promote independent analysis and public dis
cussion of commercial and other international economic
policy issues. It is a privately sponsored non-profit organiza
tion and is essentially an entrepreneurial centre under the
auspices of which a variety of activities are conducted. As
such, the Centre provides a focal point for those in business,
the universities and public affairs who are interested in
international economic questions.
The Centre is managed by a Council which is headed by
Sir Frank McFadzean, Chairman of the "Shell" Transport
SIR FRANK McF ADZEAN
Chairi'I'Uln
PROFESSOR HARRY G. JOHNSON
Vice·Chairi'I'Uln and Director of Studies
PROFESSOR JOHN ASHTON SIDNEY GOLT
SIR ALEC CAIRNCROSS FRANCO MATTEI
PROFESSOR JAMES MEADE
WILLIAM M. CLARKE
ALAN F. PETERS
JAMES A. CLAY
T.M.RYBCZYNSKI
W.M.CORDEN
HON.MAXWELLSTAMP
PROFESSOR GERARD CURZON PROFESSOR LIONEL STOLERU
PROFESSOR HERBERT GIERSCH PAUL STREETEN
SIR ALEXANDER GLEN MAURICE ZINKIN
HUGH CORBET
Director
and Trading Company. The members of the Council, set out
above, represent a wide range of experience and expertise.
v
vi
Having general terms of reference, the Centre does not
represent any consensus of opinion. Intense international
competition, technological advances in industry and agri
culture and new and expanding markets, together with
large-scale capital flows, are having profound and continuing
effects on international production and trading patterns.
With the increasing integration and interdependence of the
world economy there is thus a growing necessity to increase
public understanding of the problems now being posed and
of the kind of solutions that will be required to overcome
them.
The principal function of the Centre is the sponsorship of
research programmes on policy problems of national and
international importance. Specialists in universities and
private firms are commissioned to carry out the research and
the results are published and circulated in academic, business
and government circles throughout the European Community
and in other countries. Meetings and seminars are also
organized from time to time.
Publications are presented as professionally competent
studies worthy of public consideration. The interpretations
and conclusions in them are those of their authors and do not
purport to represent the views of the Council and others
associated with the Centre.
The Centre, which is registered in the United Kingdom as
an educational trust under the Charities Act 1960, and its
research programmes are financed by foundation grants,
corporate donations and membership subscriptions.
Contents
Trade Policy Research Centre v
List of Tables xi
Biographical Note xii
Foreword xiii
Preface XV
Abbreviations xvii
1 Nature and Importance of Trade in Invisibles 1
Outline of the Study 2
Components of Invisible Trade 4
Transport 4
Travel 5
Other Services 5
Interest, Profits and Dividends 6
Private Transfers 7
WORLD INVISIBLE TRADE 7
British Invisible Trade 14
Growth of World Capital Markets 21
2 Analysis of Barriers to Invisible rrade
31
Flow of Current Services 31
Movement of Capital 33
Direct Investment 33
Portfolio Investment 34
Types of Constraints 34
vii
viii
FINANCIAL AND TRANSPORT SERVICES 35
Restriction of Foreign Competition 35
Government Procurement 37
Exchange Control 38
MOVEMENT OF CAPITAL 39
DIRECT INVESTMENT 39
Restriction of Foreign Competition 39
Constraints on Choice of Product Mix 40
Constraints on Choice of Factor-Input Mix 41
PORTFOLIO INVESTMENT 41
Control of Interest Payments on Deposits 42
Restraints on Foreign Borrowing and Lending 42
Fiscal Measures 43
Reserve Requirements 43
Exchange Control 44
CONSTRAINTS IN PARTICULAR FIELDS 44
SERVICES 45
Insurance Case Study 45
Restriction of Foreign Competition 48
Measures for Exchange Control 52
Government Discrimination 53
Employment of Expatriates 56
Banking 56
Shipping 58
Flag Discrimination 58
Cabotage Laws 59
Operating Subsidies 60
Travel 61
MONETARY MOVEMENTS 61
Direct Investment 61
Portfolio Investment 63
ix
3 Defence of the Barriers to Invisible rrade 67
Infant Industry Argument 70
Domestic Ownership of Key Industries 72
Foreign Banks and Monetary Policy 73
Retaliation against the Constraints of Other
Countries 75
Need for Balanced Growth 79
Short-term Capital Movements 79
4 Global Approach to Constraints on
Invisible Trade 83
Evaluation of OECD Measures 87
Possible Forms of Action 91
Retaliation 91
Bilateral Agreements 92
GATT-Style Multilateral Negotiations 93
Codes of Conduct 95
Unilateral Action 96
General Code on lnvisibles and Capital
Movements 97
Financial Services: Banking 98
Transport: Shipping 98
Portfolio Capital 102
Policy for Broaching Constraints on Invisibles 103
Rey Report and Services 104
McFadzean Report and Earnings from
Investments 106
Appendix 1 113
Illustrative List of Discriminatory Constraints
on Invisible Earnings
Banking
114
Direct Investment 122