...Problem Definition and Theme In 1950 U.S. steelmakers dominated the world market. By 2000 global productivity increased and foreign steelmakers had entered the United States market causing what was perceived as a threat to domestic businesses. At this time, American steelmakers pressured the United States government to provide protection from imports leading President George W. Bush to put in place steel import tariffs under Section 201 of the 1974 Free Trade Act by March of 2002 (Robertson 2002). These protectionist measures imposed an average 30 percent tariff on selected foreign steel entering the United States. During negotiations, The International Trade Commission (ITC) recommended imposing a 40 percent commission while some extremists proposed 80 percent (Ho 2003). Although steelmakers were content with the implementation of the tariff as it provided some relief from imports, critics argued against the effects it would have on steel consuming businesses (Carbaugh 2011). The American Institute for International Steel (AIIS) felt that this tariff did not support free trade. The AIIS also believed that the steel tariff did not force companies to work in a price-competitive environment. David Phelps, president of the AIIS, believed in survival of the fittest. Phelps said that without protections such as these, strong companies would survive and weaker players would be eliminated (Robertson, 2002). With the key arguments from the U.S. auto makers, tariffs from some steel were...
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...In 1972, under the leadership of President Richard Nixon, the United States resumed its economic relationship with the nation of China; in 1979, a bilateral trade agreement was signed by the two countries. Today, China has become one of the largest trading partners with the United States, trailing only behind Canada and Mexico. The United States benefits with this trade agreement due to the large and growing consumer market for U.S. firms and the Chinese imports cost less due to the low labor cost in China. The nation of China benefits due to the increased integration with world economy through overseas education and trade, creating awareness on issues such as environment and human rights. The numerous benefits of this union between two powerhouses of the world economy bring many negative issues. The first issue that affects many Americans today is the loss of jobs due to outsourcing and importing rather than producing goods here in the United States. From the years 2001 to 2010, the trade deficit with China caused the loss of 2.8 million jobs in the U.S. This affects the Untied States’ economy by increasing the number of Americans receiving unemployment insurance and food stamps. One example of this outsourcing is Nike, Incorporated which produces an estimated forty percent of its shoe output in Chinese factories. However, Nike Inc. justifies this outsourcing because profit margins are dependent on labor cost. Another issue with the union between U.S. and China is the lack...
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...Chapter 9 The Political Economy of Trade Policy 9.1 The Case for Free Trade 1) The efficiency case made for free trade is that as trade distortions such as tariffs are dismantled and removed, A) government tariff revenue will decrease, and therefore national economic welfare will decrease. B) government tariff revenue will decrease, and therefore national economic welfare will increase. C) deadweight losses for producers and consumers will decrease, hence increasing national economic welfare. D) deadweight losses for producers and consumers will decrease, hence decreasing national economic welfare. E) None of the above. Answer: C Question Status: Previous Edition 2) The opportunity to exploit economies of scale is one of the gains to be made from removing tariffs and other trade distortions. These gains will be found by a decrease in A) world prices of imports. B) the consumption distortion loss triangle. C) the production distortion loss triangle. D) Both B and C. E) None of the above. Answer: E Question Status: Previous Edition 3) Judging by the changes in the height of tariff rates in major trading countries, the world has been experiencing a great A) trade liberalization. B) surge of protectionism. C) lack of progress in the trade-policy area. D) move towards regional...
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...A Report On “Impact of protectionist trade policy on the domestic industry and economy” Course Name International Economics Course Code FIN: 2210 Submitted To: Shaikh Masrick Hasan Lecturer Department of Finance Jagannath University Submitted By: Sohel Rana On behalf of Group-06 2nd Year 2nd Semester, 6th Batch Department of Finance Jagannath University Date of Submission: 22-02-2014 Group Members SL. NO. | NAME | ID NO. | 1 | SOHEL RANA | B 110203076 | 2 | NURNOBY RAHMAN | 115234 | 3 | UZZWAL HALDER | B 110203046 | 4 | IMAM HOSSAIN | B 110203026 | 5 | FARHANA BHUIYAN | B 110203106 | 6 | SUMAIYA YASMIN | B 110203104 | 7 | HAFIZUR RAHMAN | B 110203025 | 8 | FATEMA AKTER | B 110203006 | 9 | KHALILUR RAHMAN | B 110203055 | 10 | TOHIDUL ISLAM | B 110203024 | Letter of Transmittal Shaikh Masrick Hasan Course Coordinator Money and Banking Dept. of Finance Jagannath University Subject: To submit a report on “Impact of protectionist trade policy on the domestic industry and economy” Sir With a great respect, we are informing you that we have prepared a report on “Impact of protectionist trade policy on domestic industry and economy.” We feel great pleasure for submitting this report to you, which will...
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...SEVEN GOVERNMENTAL INFLUENCE ON TRADE OBJECTIVES • To realize the rationales for government policies that enhance and restrict trade • To interpret the effects of pressure groups on trade policies • To understand the comparison of protectionist rationales used in high-income countries with those used in low-income countries’ economies • To comprehend the potential and actual effects of governmental intervention on the free flow of trade • To understand the major means by which trade is restricted and regulated • To grasp the business uncertainties and business opportunities created by governmental trade policies CHAPTER OVERVIEW A government’s political objectives are sometimes at odds with its economic proposals to improve a nation’s market efficiency and international competitiveness. Chapter Seven begins by discussing the reasons why and the ways in which governments intervene in the international trade process. It then examines the economic and the noneconomic effects of those actions upon participants in that process. Finally, the chapter considers the principle instruments of trade control, including both tariffs and nontariff barriers, and concludes with a discussion of ways in which firms can deal with adverse trading conditions both at home and abroad. CHAPTER OUTLINE OPENING CASE: TEXTILE AND CLOTHING TRADE [See Fig. 7.1.] The United States and Europe have a long history of protecting their domestic textile and garment manufacturing industries...
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...Per capita income in Mexico is significantly lower than in the United States. In 2011, Mexico’s per capita GDP in purchasing power parity was $17,040, or 64% lower than U.S. per capita GDP of $47,190 (see Table ?). Ten years earlier, in 2001, Mexico’s per capita GDP in purchasing power parity was $10,653, or 70% lower than the U.S. amount of $36,082. Although there is a notable income disparity with the United States, Mexico’s per capita GDP is relatively high by global standards and falls within the World Bank’s upper-middle income category. Mexico’s economy relies heavily on the United States as an export market. Exports accounted for 32% of Mexico’s GDP in 2011 and over 80% of Mexico’s exports are headed to the United States. (Villarreal 2012) Up until the 1980’s Mexico followed strict protectionist policies to protect their domestic industries from being overwhelmed by unfair competition of other countries. As expected, the protectionist policies worked in the short run but after decades of this policy Mexico suffered a tremendous economic collapse. Many of the industries that Mexico was trying to protect became less competitive in the marketplace. This collapse started the framework for the North American Free Trade Agreement (NAFTA) that ultimately went into effect in 1994. Gauging the effect that NAFTA had on the U.S economy is difficult. Positively or negatively Mexico’s trade with the United States is only 2% of U.S GDP. Thus, changes to trade agreements with...
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...The United States has generally followed four tenets of economic policy in the twentieth century: laissez faire with minimal interventions, frequently, uncoordinated intervention in a mostly free market, systematic state guidance of private decision-making, and thorough state management and decision-making for the whole economy. In 1798, there was the first Congressional tariff act regarding imported foreign goods. In 1828, there was a protectionist tariff which was indicative of the US’s outlook and opinion on foreign trades and goods. This was directly in contradiction of the modern belief of free trade, as the US was relatively and consistently protectionist in the nineteenth century. It was also during this period of time that Henry Clay introduced the first thoroughgoing program for economic development, or the American System – “cherishing the foreign market, creating a home market… giving further scope to the consumption of the produce of the American industry… counteracting the protectionist policy of foreigners and withdraw the support…to their industry, and stimulate that of our own country”. Essentially, he was speaking about import substitution – this was very nationalist. This was opposed during and before the civil war. Additionally, in 1870s, there were significant federal aid given to railroads to stimulate their growth. Additionally, cities and states gave aid to banks, canals, and other infrastructure – this was influenced by the emphasis of a nationalist economy...
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...Theory and Policy Institution Date The aim of this article is to discuss a number of issues associated with the international trade theory and policy. First, the motives, nature and purpose of the original General Agreement on Tariffs and Trade have been discussed in this article. Also, the extent to which this purpose was achieved in the first 6 rounds of negotiations has been discussed. The reasons that drove President Reagan and his administration to propose the eighth round of negotiations are also featured in this article. Lastly, the reasons why there is still a significantly steep “effective” tariff hampering global free trade, despite fairly low tariffs on final goods have also been discussed in this article. The General Agreement on Tariffs and Trade (GATT) was formed in1947. This was after the United Nation conference whose aim was to create the International Trade Organization failed. The GATT came to an end in 1993. In 1995, the (World trade organization WHO) replaced GATT. GATT principal purpose was to boost fair trade by reducing and taking control of the trade tariffs amongst its member countries. In addition, it was responsible solving any trade disputes between the member countries. Before it ended, The GATT had become interested in the intellectual property rights and the effects of global trade on the environment. The General Agreement on Tariffs and Trade had a provision known “as the most favored nation status.” GATT refers the member states as the...
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...------------------------------------------------------------------------------10-13 Section 5: Conclusion------------------------------------------------------------------------------------13-15 Works Cited-----------------------------------------------------------------------------------------------16 Section 1: Introduction The United States should institute a blanket reform of its international trade policies. Its current protectionist practices are both in violation of current World Trade Organization suggestions and mandates and, far from being beneficial to the American economy, for the most part serve to hurt both American and foreign consumers. There are few American markets not protected in some way by the Federal Government in the form of tariffs, quotas, or domestic subsidies. While these practices are touted as an aid to domestic manufacturing process, true economic analysis shows that most if not all protectionist measures actually serve to limit economic growth. The arguments given to justify protectionism range from the poorly-disguised corporate handout to downright racism, while the few good reasons for it such as to protect 'sunrise' or developing industries do not apply to the United States. Section 2: What is Protectionism? Protectionism, defined simply, is any form of barrier to free trade that a governing body places on a market. By this definition, any trade legislation that the government...
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...This battle is seen to have a country wide negative effect on China's general consumption. The effects are so particularly felt on the luxury purchases and the government related purchases. Indeed, in the current political environment and with a continuous decrease of the land division, the nation is still ready to keep up the development of its GDP with a shocking number of 7.5% in 2014. On the other hand, numerous reports from the macroeconomic business and worldwide financial organizations, (for example, the World Bank) have since anticipated a slower economic development for the current year, 2015. This paper provides a report on China's macroeconomic condition, particularly the position in the international trade and the contemporary policies in 2015. Macroeconomic Development China predominantly imports raw materials and in turn it predominantly exports industrial products, both developed and developing countries. It reported a trade surplus of US$ 49.6b and US$ 25.6b in December 2013 and 2013 respectively. Throughout last year, exports rose by 9.7% to US$ 227.5b in December. Interestingly, shipments tumbled to Japan at -7.2%. Figure1. In the appendix represent the trend of China’s Balance of Trade between January 2014 and January 2015. Imports diminished by 2.4% to US$ 177.9b. In the interim reports, percentage reports were recorded as the Australia (3%), EU nations (15.4%), the US (3.0%), South Korea (1.3%) and Taiwan (13.6%). In 2014, the nation's aggregate exports...
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...Cause and Effect of Out Sourcing Auto Parts Jim Banta Strayer University English 115 Professor Daniel Burrello November 25, 2012 An increase in foreign auto parts supplier has cause grave concerns amongst some American suppliers the protectionists have set their sights on eliminating these new competitors: The foreign manufacturers, especially Japanese auto parts makers that have built plants and limited distribution in the United States and according to some are having an adverse effect on the U.S. economy. A small but politically vocal coalition of American auto parts manufacturers and their unions is complaining that the Japanese auto parts suppliers located in the United States do not supply the quality of parts for their cars. By purchasing auto parts from Japanese suppliers located in Japan and in the United States, automakers are accused of nothing less than a conspiracy to "colonize" American industry. The increased competition provided by Japanese auto parts manufacturers provides significant benefits to the auto industry and workers and to consumers. Consequently, any legislative action that restricted such competition would have harmful effects on the economy. As with all protectionist legislation, such actions would provide short-lived benefits to a small segment of the auto parts industry but would be harmful to the industry in the long run by reducing its incentives to produce better products. An estimated 15,000 parts and accessories...
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...Wal-Mart’s Economic Influence on the American Economy and American Protectionism Policy ------------------------------------------------- Prepared by: Ugur Kaya Professor: John Bottomley Date: 09 December 2011 Word Count: 1570 EXECUTIVE SUMMARY The purpose of this report is to present Wal-Mart’s influence on the American economy in the long term. This report has considered Wal-Mart’s damaging effects on local stores and manufacturers which cause loss of jobs in the American society. Furthermore, effects of importing goods from foreign countries and selling it in local market are discussed. After taking above criteria into consideration, it is demonstrated that Wal-Mart impacts the American economy badly in long term. In order to recover the damages done to local manufacturers, retail stores and other injured parties/individuals, the American government may impose a protectionist policy. Table of Contents INTRODUCTION 1 BACKGROUND 1 DISCUSSION 2 CONCLUSION 4 WORKS CITED 5 INTRODUCTION The purpose of this report is to determine if and why or why not the United States of America may become more protectionist of the American economy than it is currently. In order to decide if harm is being done to American economy in the long term, Wal-Mart’s economic influence on the American economy will be taken into consideration as an example. BACKGROUND Wal-Mart is the largest company in the world, in the history. This is proven by numbers, revenue...
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...Page 1 Copyright (c) 2011 Suffolk University Suffolk Transnational Law Review Summer, 2011 Suffolk Transnational Law Review 34 Suffolk Transnat'l L. Rev. 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...
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...Dalpour Abstract The history of global trade shows that free, fair, and open trade is not necessarily the norm. If allowed, larger nations would monopolize trade to their advantage and destroy open competition. The purpose of this paper is to review the history of trade to find out the reasoning behind establish a General Agreement on Tariffs and Trade (GATT). To meet this goal, this student will quickly review world history concerning trade, the introduction of GATT, its successes and weaknesses, and the emergence of the World Trade Organization (WTO) as a successor to GATT. From this literary review, I will cite three current examples – within the last decade – on how recent tariffs and trade barriers still affect the United States of America: * 2002 - US Steel tariff * 2007 - Paper tariff on Chinese Paper * 2009 - Violation of North American Free Trade Agreement with Mexico and its effect on US trade Finally, I will give me opinion on whether or not I believe the WTO/GATT is still relevant for 2012 and beyond. Why Was There A Need For A General Agreement on Trade and Tariffs? The history of trade – and protectionism of the trade of goods – is record all the way back to the Roman Empire. Trade at that time was characterized by Roman control over roads and on ships throughout the Mediterranean region. If you wanted to move your goods, you would at one point pay the Roman Government. Other countries, such as the Netherlands, Hong Kong, and...
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...Role of States and IOs in Reduction of Child Labor: Analysis Based on Abolitionist and Protectionist Approaches Jin Hun An 2013470001 International Organizations 18 June 2013 Child Labor – Overview and Definition Overview Globalization embodies a process of recurring interaction between diverse actors in pursuit of collective goals. With a rise of new technology, a concept of time and space has diminished, and 21st century has seen economic success and increasing numbers of transnational activities. Growing influence of global civil society and cross-border social movements demonstrate how people in the contemporary era seek ways to bring about mutual benefits in hopes of closing gaps between developed and developing countries. (Baylis, Smith, & Owens, 2011) Nevertheless, severe poverty, human rights violations, as well as child labor issues are still prevalent in many developing countries. Worst of all, women and children are victims of governmental apathy and corruption in most persecuted communities. Children in developing countries with ill-constructed welfare system undergo extreme poverty and malnourishment. For their families’ survival, children under the age of fourteen work for the whole day, and they do not have any spare time to go to schools. Pakrashi (2009) has demonstrated a vicious cycle of child labor trap in Sub-Saharan Africa and Asia: “Despite the high private rate of return to primary education, in Sub-Saharan Africa and Asia, many families...
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