This document discusses entry barriers and instruments of government intervention in international trade. It provides rationales for government intervention such as unemployment, infant industries, and strategic trade policy. The main instruments of intervention discussed are tariffs, subsidies, quotas, embargoes, local content requirements, administrative policies, customs valuation, antidumping duties, standards, and reciprocal requirements. Specific examples are given to illustrate different types of barriers and interventions used by governments to influence international trade.
This document discusses entry barriers and instruments of government intervention in international trade. It provides rationales for government intervention such as unemployment, infant industries, and strategic trade policy. The main instruments of intervention discussed are tariffs, subsidies, quotas, embargoes, local content requirements, administrative policies, customs valuation, antidumping duties, standards, and reciprocal requirements. Specific examples are given to illustrate different types of barriers and interventions used by governments to influence international trade.
This document discusses entry barriers and instruments of government intervention in international trade. It provides rationales for government intervention such as unemployment, infant industries, and strategic trade policy. The main instruments of intervention discussed are tariffs, subsidies, quotas, embargoes, local content requirements, administrative policies, customs valuation, antidumping duties, standards, and reciprocal requirements. Specific examples are given to illustrate different types of barriers and interventions used by governments to influence international trade.
This document discusses entry barriers and instruments of government intervention in international trade. It provides rationales for government intervention such as unemployment, infant industries, and strategic trade policy. The main instruments of intervention discussed are tariffs, subsidies, quotas, embargoes, local content requirements, administrative policies, customs valuation, antidumping duties, standards, and reciprocal requirements. Specific examples are given to illustrate different types of barriers and interventions used by governments to influence international trade.
MIB 203 ENTRY BARRIERS (TARIFF AND NON-TARIFF) 1 7/3/2018 In spite of theoretical justifications Given by Adam
MIB 203 Smith, Ricardo and Hecksher Ohlin regarding gains which arise due to free trade, nations all over the world, interfere in international trade.
2 RATIONALE FOR GOVERNMENT INTERVENTION
7/3/2018 Unemployment: (one of the most common) Common Agricultural Policy (CAP) EU. Subsidy for farmers in Japan
MIB 203 Infant industry argument: (one of the oldest argument by Hamilton 1792 for protectionism) Industrialization argument: Essential industries: Aerospace, Defense, Electronics, Semiconductor Foreign policy objectives: UN trade sanctions on Iraq (1991) Protection of consumer/ consumer safety: Hormone treated beef in EU Pentachlorophenol (PCP) used in tanning of leather (affects 3 Indian exports) 7/3/2018 Human rights: Most favoured nation(MFN) status to China before 2001
MIB 203 Strategic trade policy: Boieng and Airbus (G. Britain, France, Germany, Spain 1960) Semiconductor industry of Japan
Balance of payment argument:
4 INSTRUMENTS OF INTERVENTION
7/3/2018 Tariff
MIB 203 Export tariff (levied on exports)
Import tariff (levied on Imports)
Specific duty (per unit basis)
Ad valorem duty (percentage of value)
Compound duty (combination of both)
5 7/3/2018 Subsidies Direct payment given by the government in order to make it more competitive nationally or internationally.
MIB 203 Forms: Cash grant Low interest loans Tax benefits R&D support Government equity participation in local firm. Some countries provide subsidies by offering market information, trade exposition, foreign contacts for potential exporters. Example: Agricultural subsidy given by most developing nations. 6 R&D support, Boeing 7/3/2018 Quota Quantity form of restriction imposed on Imports and Exports
MIB 203 The license specifies the maximum amount of quantity that could be Imported or Exported. 1. Import quota 2. Export quota A variation of Import quota is Voluntary Export Restraint (VER) Japan v/s America 1981 (1.68 million cars) Embargo: Levied on products exported from Japan to India during tsunami 7 7/3/2018 Local content requirement Some specific fraction of the product be produced locally.
MIB 203 Example: During recession (2008) America restricts fraction of work to be done in home country. Administrative policies: Rules and procedures to be followed. Example: Netherlands exports Tulip bulbs to all nations except Japan. All VCR exported from Japan to France has to pass through small custom entry point which is distantly 8 located and poorly staffed 7/3/2018 Customs valuation: In order to collect ad valorem duty custom value the goods. Sometimes this customs valuation can also be used as an
MIB 203 instrument (intentionally) by nations to discourage imports or exports. Example: Initially SUV was considered truck, US officials imposed 25 percent duty instead of 2.5 percent. Antidumping and countervailing duties: Standards: Classification, Labelling, Testing standards. Place of origin of raw material.
