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Trade Policies Reasons for Import Restrictions 1. Unemployment Argument To reduce unemployment rate. Problems: a. b. c. 2. Cheap labor Argument To protest against exploitation of foreign workers
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Trade Policies Reasons for Import Restrictions 1. Unemployment Argument To reduce unemployment rate. Problems: a. b. c.
2. Cheap labor Argument To protest against exploitation of foreign workers and violation of human rights (in “sweat shops”). Problems; 1. 2. 3. 4.
Cost 3. Infant Industry Argument To protect ( ) domestic firms since they can’t enjoy ( ). Problem: 4. Industrialization Argument To restructure their agr. oriented economy to mfg. oriented one due to ( ). term of trade = exp. price (agr) imp. price (mfg) Problem: Q'ty
5. National Income Argument To increase national income by minimizing import (“beggar-thy-neighbor” policy) . Yus = D = C + I + G + ( X - I ) Yuk = D = C + I + G + ( X - I ) Problem: 6. Political Argument (Sanction) To protest/punish unacceptable political behaviors. Problem: 7. Balance of Payment Argument To reduce a large amount of B.O.P or Trade deficit. Problem:
Various forms of Tariff A. Objectives 1. Revenue T. : 2. Protective T. : 3. Progressive T. : 4. Retaliatory T. : 5. Countervailing T. : *(Surcharge) : 6. Punitive T. :
Non-Tariff Barriers (N.T.B.) 1. Government subsidies. 2. Ex. rate manipulation. 3. Problems at customs house. a. b. c. d. 4. Quota (quantity limitation) a. b. 5. Buy local policy a. b. 6. Foreign exchange control a. b. 7. Complicated/burdensome import procedures; a. b. c. d.
Section 301, Trade Act (super 301) This section requires U.S. government to prepare a ( ) that ( ) access of US products to their markets. Section 201, Trade Act (Safeguard provision) When ( ), they may petition for temporary relief such as a quota. The President will make the decision whether to provide relief and the amount of relief (e.g. limitation on the quantity to be imported). Fast-track Authority US congress traditionally extended the privilege and the right to the president to ( ). It was originally designed to speed the reduction of trade barriers and open new markets with other countries.