Workload: 40 hours per week
Faculty: Dr. T. Ziesemer, Maastricht University and UNU-MERIT
Assessment: Participation in class, several progress reports, a case study, written exam on the literature

Content and objectives
In principle international trade is advantageous for the citizens of countries. Households can buy goods and services where they are cheaper. Firms can specialize in goods in which they are better than their international competitors, making them cheaper again for households. This is the basic idea behind trade liberalization. However, there are disadvantageous as well, which are well known not to overthrow the advantages if taken into account properly. Many of them are not taken into account though: If there is more trade there is also more transport, more energy use and more environmental pollution. If waste is traded there are health externalities, for example in the ship breaking industry. If genetically modified food is traded there are potential health externalities, which ask for more research. These problems are mostly ignored in the trade negotiations and abused as arguments in favour of protectionism.

Students have to learn the basics to understand these conflicts and find sophisticated solutions. This requires learning the following lessons:

• The gains from trade and its exceptions.
• What does trade contribute to development?
• How important is it to have other sectors besides primary products?
• How relevant are unhealthy sectors and products for development?
• What are the efficient policy measures to deal with the above-mentioned problems?

Literature

• Krugman, P.R. and M. Obstfeld, International Economics, 7th edition, 2006, Parts 1 and 2.
• Pugel, T. and P.H. Lindert, International Economics, 11th edition, Chapter on Trade and the Environment.
• Perkins,D.H., S. Radelet, D.R. Snodgrass, M. Gillis, M. Roemer, 2001. Economics of Development, 5th ed., W.W. Norton, New York, London, Chapters 16 and 18.
• Christian Joerges, Free Trade with Hazardous Products? The Emergence of Transnational Governance with Eroding State Government, 2006-03-01. By: URL: http://d.repec.org/n?u=RePEc:erp:euilaw:p0041&r=int