...situation has divided opinion on the use of trade protectionism.’ Discuss. ECONOMIC CRISIS AND PROTECTIONISM: A DISCUSSION Introduction First and foremost to logically explore the question at hand, the meaning of trade protectionism must be fully comprehended, according to Amadeo (2012) “Trade protectionism is used by countries when they think their industries are being damaged by unfair competition by other countries” The fundamental commotion of the pre-Great Recession on the economic order that was based on the assumption of inherent value of unlimited trade and capital flows has led to the new emergence of debate on trade protectionism as the means of combating the present crisis. In particular, the European Union (EU) nations have seen increasing calls for the implementation of the more protectionist economic policies. However, given the integrated and interconnected nature of both modern and specific national economies, one may note that protectionist policies would be more likely to hurt economic recovery and contribute to the sharpening of international trade contradictions. This paper presents an account of both parties’ argument, with the recourse to respective quantitative data, in order to substantiate the claim on infeasibility of treating protectionism as a cure for global and European economies’ maladies. The Impact of Protectionism on Crisis and Post-Crisis Developments According to Henn & McDonald (2011), trade protectionist measures implemented by certain...
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...Arguments for Free Trade among Nations as opposed to Arguments for Protectionism In economics, trade, both nationally and internationally is a subject that is highly debated. Trade affects every one in every nation, has a significant impact on a country’s standard of living and can be used to foster new ideas and products. There are currently two opposing policies of how to conduct trade, protectionism and free trade, also called laissez-faire. A county’s comparative advantage at producing certain products causes many debates over why one way of trade is better than another. Tariffs, embargo’s and quota’s that are put on trade are forms of protectionism, which is the restriction of trade between states/countries. Protectionism is preferred in some groups for a variety of reasons, one of the reasons is that, it is thought that protectionism can protect ‘infant’ or new companies and industires.1The idea behind this is that it helps protect domestic companies that are just starting from foreign competitors that could introduce products at a lower cost. Tariffs are then set up, to make the foreign goods artificially expensive allowing the new or ‘infant’ firm to set up until they are able to compete on equal footing.1 Another argument in favor of protectionism is that one country might be able to use it as a threat against another country to force a reduction or removal of their protection against its exports.3If the threat worked then that country using it as such would gain...
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...Critically evaluate the potential justification for protectionism Introduction A number of governments are concerned with unemployment and recessionary impact following the financial crisis. The result of this has been for many to be being placed under political pressure to implement protectionist instruments such as tariffs. quotas and subsidies (Love et al, 2014). This essay will identify the five principal instruments used by governments for protectionism and their consumer welfare implications. It will then seek to critically evaluate the justifications used for protectionism. Protectionist instruments and their welfare implications Protectionist instruments can be defined as a policy though which a government seeks to control international trade for the purpose of protecting local businesses or employment from foreign competition (Krugman et al, 2012). A Tariff is a tax which is levied on imported goods. Tariffs on goods increase their price in an economy and can be specific or ad velorum i.e. a proportion of the value of the good against which a tariff is raised. Tariffs impact on the welfare of market participants can be considered in the context of small countries (where foreign export prices cannot be affected) and large countries (where they can), the outcomes for which may be different. In small countries where tariffs are introduced, importing economies experience increases in imported goods and the price of substitutes manufactured locally, reducing consumer...
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...International Trade Definition International Trade is usually referred to the exchange of goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP). In 2010, the value of international trade achieved 19 trillion (current US) dollars, i.e. about 30% of the world GDP. That is, about one third of the produced goods and services are exchanged internationally around the world. This type of trade gives rise to a world economy, in which prices, or supply and demand, affect and are affected by global events. Political change in Asia, for example, could result in an increase in the cost of labor, thereby increasing the manufacturing costs for an American sneaker company based in Malaysia, which would then result in an increase in the price that you have to pay to buy the tennis shoes at your local mall. A decrease in the cost of labor, on the other hand, would result in you having to pay less for your new shoes. Trading globally gives consumers and countries the opportunity to be exposed to goods and services not available in their own countries. Almost every kind of product can be found on the international market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are also traded: tourism, banking, consulting and transportation. A product that is sold to the global market is an export, and a product that is bought from the global market is an import. Imports...
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...------------------------------------------------- The Global Financial Crisis and Protectionism QUESTION 1: Why do you think calls for protectionism are greater during sharp economic contractions than during boom periods? * Protection of their own economic industries and to curb job losses * Interdependent economy to lessen the impact of economic loss on food, fuel and property prices * To protect job losses at national producers and possible bankruptcy * Developing countries were concerned about safety rules and environmental concerns. * In an emerging economy, a barrier to trade and blocking of imported goods due to safety and environmental reasons could spark entrepreneurs to grow the local economy with local jobs and local suppliers Protectionism = “Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts to local businesses and direct state intervention.” (http://www.investopedia.com/terms/p/protectionism.asp) QUESTION 2: Despite the sharp economic contraction during 2008-2009, the increase in protectionist measures was fairly modest. Why do you think this was the case? * After the 1930 economic slump, some of the trade constraints did more harm than good. * The WTO instituted protectionist measures to protect countries and provide a more stable...
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... Moderators Signature: Overall Mark (subject to ratification by the assessment board) Assessors Signature: Students Signature: (you must sign this declaring that it is all your own work and all sources of information have been referenced) TableofContents: 1. Explain why governments may advocate free trade whilst at the same time resort to protectionism to protect their domestic industries 3 2. Explain what types of barriers may be used and what impact they have on consumers and producers 9 Part1:Explain why governments may advocate free trade whilst at the same time resort to protectionism to protect their domestic industries. Introduction Free trade has been growing the last three decades due to market globalization, industrialization and growing number of developing countries. According to free trade, countries do not restrict imports and exports, and they establish open markets in own areas. Therefore, foreign investors and producers can enter the market freely and trade their goods and services without any trade barriers or taxes. Free trade is exercised between countries based on their agreements with each other. Free trade fosters economic development of developing and poor countries, as well as enable consumers to have access to variety of products and services at lower prices....
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...Trade protectionism is any economic policy by a government to impose restrictions on import goods and services, provide special preferences to domestic goods and services to enhance the competition. There are two basic ways of trade protectionism, one is tariff barrier, another is called non-tariff barriers, including quotas, subsides and administrative barriers. This essay is to talk about the main ways of protectionism and its definition with some real examples. Tariffs are import taxes, raising the price of imported products to limit the number of imports, causing a contraction in domestic demand and an expansion in domestic supply (Riley, 2006). Normally, the volume of imports is reduced and the government received some tax revenue from the tariff. While, the Section 201 steel tariff is another case. In 2002, US imposed tariffs on imports of certain steel products for three years and one day (Francois & Baughman, 2003). Immediately, the European Union announced that it would impose retaliatory tariffs on the U.S., thus risking the start of a major trade war (Francois & Baughman, 2003). In this way, the price of both sides got higher, made impacts on each other. Steel tariffs caused shortages of imported product and put U.S. manufacturers of steel-containing products at a disadvantage relative to their foreign competitors. As a result, 200,000 Americans lost their jobs to higher steel prices during 2002. In the absence of the tariffs, the damage to steel consuming...
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...According to the World Trade Organization, (2015) trade can stimulate long-term economic growth by creating jobs; unfortunately, it can also prove to be unbeneficial. The reasons that WTO stated include: technology changes, protectionism, and import competition (Growth and jobs). Protectionism occurs when a country design regulations to protect “domestic industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions or handicaps placed on the imports of foreign competitors” (Protectionism, 2015, para. 1). In reality some countries can adjust better than other countries because of the effectiveness in their policies. In addition, it is clear that the world seemingly operates more effectively via free trade and restricting free trade tends to create more problems. Then again, free trade can stimulate economic long-term growth by providing numerous trading opportunities to gain a comparative advantage, unlimited production possibilities, and improve efficiency (output of products) (McConnell, Brue, & Flynn, 2015). International trade can create jobs through exports; in fact, the Department of Commerce compiled a report showing that exporting goods play a critical role in relation to employment. Exports created jobs and increased the GDP (Gross Domestic Product) because it expanded the global market for businesses by providing opportunities (Massoudi, n. d.). Furthermore, the data shows that U.S. exports increased to nearly $1.7...
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...|World Trade | | |Organization | | | | | | |WT/MIN(11)/11 | | |17 December 2011 | | |(11-6661) | | | | |MINISTERIAL CONFERENCE | | |Eighth Session | | |Geneva, 15 - 17 December 2011 | | EIGHTH Ministerial Conference CHAIRMAN'S CONCLUDING STATEMENT My statement is in two parts. The first part...
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...content requirements. Nigeria imposes quotas on foreign personnel based on the issued capital of firms. Such quotas remain especially strict in the oil and gas sector and may apply to both production and services companies. Oil and gas companies must hire Nigerian workers, unless they can demonstrate that particular positions require expertise not found in the local workforce. Positions in finance and human resources are almost exclusively reserved for Nigerians. Nigerian port practices continue to present major obstacles to trade. Importers report erratic application of customs regulations, lengthy clearance procedures, high berthing and unloading costs, and corruption. These factors can contribute to product deterioration, which may result in significant losses for importers of perishable goods. Nigeria uses nontariff measures to achieve self-sufficiency in certain commodities under its backward integration program Consequences of Trade Restrictions A combination of tariffs, quotas, and subsidies can serve economic, and sometimes political, objectives, but they can also impose significant costs. Tariffs or quantitative restrictions protect domestic industries and workers from foreign competition by raising the prices of imported goods. In this respect, some argue that import restrictions should be viewed as a tax on domestic consumers. According to some experts, the costs of protecting the jobs of workers in vulnerable industries, which are ultimately borne by...
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...CAMPAIGN. TODAY, THE REPUBLICAN PARTY IS USING SOLYNDRA AS A KEY TOOL IN ITS CAMPAIGN AGAINST OBAMA — SMEARING THE ENTIRE CLEAN ENERGY INDUSTRY IN THE PROCESS.” (Lacey, 2012) Campaigns of this magnitude have a significant impact on the international political scene, and economic decisions. Considering that currently China has a very large and inexpensive manufacturing capabilities, as comparing to those in the U.S.; it should not come as a surprise that they can outperform Western (U.S.) manufactures. “PRICES OF SOLAR PANELS HAVE PLUMMETED, CAUSING A SUPPLY GLUT AND SLICING COMPANY REVENUES. SOLYNDRA'S COLLAPSE MARKED THE THIRD TIME IN AS MANY WEEKS THAT A SOLAR COMPANY DECLARED BANKRUPTCY. EVERGREEN SOLAR INC. OF MASSACHUSETTS AND SPECTRAWATT OF NEW YORK ALSO FILED FOR PROTECTION. (Mulkern, 2011). Clean energy is not only appealing to the United States, “THE CHINESE GOVERNMENT IS [also] INVESTING IN SOLAR PRODUCTION, WHICH HAS LED TO A BURST IN PRODUCTION THAT HAS BOOSTED SUPPLIES AND FORCED DOWN PRODUCT PRICES WORLDWIDE. THE PRICE OF PANELS HAS TUMBLED MORE THAN 40 PERCENT IN A YEAR, […]. (Mulkern, 2011). It is not unusual in the cases, where two separate Governments support identical national industries, to asses that other side engages in the unfair trade practices. Since those disputes are frequently politically charged, neither side is willing to conceded any points. In this case “CHINA'S...
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...Trade Policy Reforms in India Geethanjali Nataraj NCAER, New Delhi For the ICRIER-SABER workshop, 29-30 June p, 2009, New Delhi. Trade Policy in India • Trade Reforms form the crux of the economic reforms in India. • Export Promotion has been and continues to be a major thrust of India’s trade policy • Accordingly, policies have been aimed at creating a friendly environment by eliminating redundant procedures, increasing transparency by simplifying the processes involved in the export sector and moving away from quantitative restrictions, thereby improving the competitiveness of Indian industry and g p reducing the anti-export bias. • Steps have also been taken to promote exports through g g multilateral and bilateral initiatives and giving several incentives to exports to cope with all uncertainties at the global level. Features of Trade Policy Reform in India • • • • • Free imports and Exports Rationalization of tariff structure/reducing tariffs Decanalisation Liberalization of the exchange rate regime. Setting up of trading houses, SEZ’s and Export houses SEZ s promotion industrial parks. • Various exemptions under the EXIM policies to boost exports and imports and make the trade policy regime transparent and less cumbersome. p Towards a more open economy 1990 91 1990-91 Peak Import duties ( Manufactures ) Import Controls Trade goods)/GDP ratio ( %) Software exports ( & billion) Worker remittances ( $ billion) FDI ($ billion) g y Foreign currency reserves ($...
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...duty to be paid on a particular class of imports or exports. • China’s trade game • Background of the US tire industry Introduction • 20th April 2009 Ø American labor unions signed and filed a petition to the International Trade Commission requesting an investigation on the Chinese tire imports • Results from the investigation • 18th June 2009 Ø ITC and president Obama agreed on 3 years of years of duties on Chinese tires: q 35% in the first year q 30% in the second year q 25% in the thirds year Summary of the case: U.S. Actions • China’s appeal against U.S. tire tariffs • Tariffs imposed by China on U.S. imports Ø 105% Tariffs on U.S. Chickens (2010) Ø Substitute Airbus for Boeing ? Summary of the Case: China’s Retaliation ARGUMENTS FOR : ARGUMENTS AGAINST: ECONOMIC: • Protect the U.S. from unfair competition brought in by China • Protect tire industry workers in the U.S. • Stop dumping caused by low cost producers- China ECONOMIC: • Inflict economic damage on both countries • Loss of economic welfare (in the U.S.) Ø Higher prices Ø Lower consumer choice • Trade war POLITICAL REASONING : • One of the key reasons President Obama backed up the International Trade Commission was to keep the American labour unions content and gain their support during the elections. • Expected outcome of the protectionism policy applied Ø Predicted increase of 1,200 jobs on the tire-manufacturing sector ...
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...image of the representative resident’s well being is the unequal distribution of per capita income. In order to provide a better image of the economy, the NIPA has to adjust its account for various environmental considerations to keep our economies on a sustainable development path, replace conventional macroeconomic indicators with measures of welfare, and guarantee that a wide range of environmental and social impacts will be taken into accounts as we make decisions about economic growth or development towards consideration of other forms of well being. Chapter 25, Question 7 Free trade between countries does not exist; however it does exist among the 50 states of the United States because the U.S. Constitution forbids tariffs between all states and places them under the Congress to regulate interstate commerce. Also the 50 states are subject to the same federal laws about banking, labor, and the environment, and they use the U.S. dollar as the legal medium of exchange and none can devalue its currency against the other states. However, countries establish trade policies that serve their own best...
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...403 LENGTH: 9744 words NOTE: UNITED STATES-CHINA TRADE WAR: SIGNS OF PROTECTIONISM IN A GLOBALIZED ECONOMY? NAME: Kara Loridas LEXISNEXIS SUMMARY: ... Among the aims of the Doha Development Round are a rejection of protectionism and an attempt to ensure fair application of trade rules to developing countries. ... China argued that the increased tariffs imposed by the United States on Chinese tires exceed the permissible maximum tariff rates that the United States may impose on Chinese imports. ... An example of effective negotiations is the settlement of the U.S. complaint alleging a Chinese violation of the national treatment concept by its preferential treatment of domestic products over "like" imported products. ... Cooperative trade relations between the United States and China are important to the global community because the economies of each country are dependent on the rest of the world and the global economy will be harmed by protectionist measures from the first and third largest trading powers. ... Moreover, multilateral negotiations, as opposed to bilateral trade negotiations, are better suited to resolve the United States-China trade disputes because the disputes affect other WTO members in ways beyond the immediate economic impact. ... The most effective way to combat the rapid escalation and retaliatory nature of the disputes is to conduct multilateral negotiations that will preserve the WTO's goal of reducing trade barriers, avoid the adversarial nature of WTO litigation...
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