The document discusses different types of national trade policies that governments use to regulate imports and exports, including tariffs, subsidies, quotas, export restrictions, local content requirements, and antidumping policies. It outlines the consequences of these policies for different groups. For example, import tariffs make domestic producers and the government better off through increased protection and revenue, but make consumers and foreign producers worse off through higher prices. The policies aim to balance objectives like protecting domestic jobs versus consumer interests and allocative efficiency.
The document discusses different types of national trade policies that governments use to regulate imports and exports, including tariffs, subsidies, quotas, export restrictions, local content requirements, and antidumping policies. It outlines the consequences of these policies for different groups. For example, import tariffs make domestic producers and the government better off through increased protection and revenue, but make consumers and foreign producers worse off through higher prices. The policies aim to balance objectives like protecting domestic jobs versus consumer interests and allocative efficiency.
The document discusses different types of national trade policies that governments use to regulate imports and exports, including tariffs, subsidies, quotas, export restrictions, local content requirements, and antidumping policies. It outlines the consequences of these policies for different groups. For example, import tariffs make domestic producers and the government better off through increased protection and revenue, but make consumers and foreign producers worse off through higher prices. The policies aim to balance objectives like protecting domestic jobs versus consumer interests and allocative efficiency.
The document discusses different types of national trade policies that governments use to regulate imports and exports, including tariffs, subsidies, quotas, export restrictions, local content requirements, and antidumping policies. It outlines the consequences of these policies for different groups. For example, import tariffs make domestic producers and the government better off through increased protection and revenue, but make consumers and foreign producers worse off through higher prices. The policies aim to balance objectives like protecting domestic jobs versus consumer interests and allocative efficiency.
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Global and national governance of trade
Types of national trade policies:
1. Import tariffs a. Taxes on imports b. Specific – Fixed charge per unit for each good c. Ad valorem – levied as a proportion of value of imported good. d. Consequences:
Better off: Government (increase in Worse off: consumers (have to pay
revenue), domestiv producers more) foreign producers (increase in (protection) cost) Reduces overall efficiency in world economy – allocative inefficiency e. Example: US – China Trade war (spanned across various industries) In 2018-19, a major trade conflict started between the US and China. The US imposed tariffs on about $350 billion worth of Chinese imports, and China retaliated by levying tariffs on an additional $100 billion worth of imports, a retaliatory action allowed by WTO rules. 2. Subsidies a. Government payment to a domestic producers to help domestic producers compete against foreign imports and gain export markets. Normally this is in a good that the country does not have competitive or absolute advantage in. b. Types: cash grant, low interest loans, tax breaks or concessions, govt equity participants (bonds) c. Consequences:
Better off: domestic producers Worse off: Taxpayers (pay for the (protection), consumers – domestic subsidy), government (opportunity cost product are the same cost as is high), allocative inefficiency, international products. possibility of an unwanted surplus 3. Import Quotas a. Direct restrictions on quantity of some good that may be imported b. Tariff rate quota: Lower tariff rate to imports within the quota than those over the quota c. Quota rent: extra profit producers make when supply is artificially limited by an import quota – supply is less so price can be hiked up. 4. Export tariffs and bans a. Tax placed on the export of a good b. To discriminate against exporting a good that needs to be kept in the home country to ensure that there is sufficient supply of the good within the country. c. Ban – policy that entirely restrict the export of a good d. EU prohibits a range of goods to or for use in Russia. 5. Local content requirements a. Some fraction of a good must be produced locally b. Physical or value terms c. Protects domestic proiducers d. Consumers face higher prices e. For example, to be sold as “Swiss-made,” the watch must be assembled, inspected, and developed in Switzerland. In addition to that, 60% of all costs must be incurred in Switzerland. Finally, the movement must be made in Switzerland according to Swiss Law. Thus, increased research and factor costs are also reflected in a watch’s final cost. This is an example of local content requirements. 6. Antidumping policies: a. Dumpling occurs when companies sell goods in foreign market below their costs of production or actual market value – this is a way to unload excess production. b. Obvious unfair to local producers coz consumers will buy the foreign products for sure. Motives for government intervention - Protecting jobs and industry - Protecting national security = US/China tech imports - Protecting consumers - Furthering political objectives - Human rights - Infant industry - Strategic trade policy
