...ECFI 644 International Economics Instructor: Dosse Toulaboe By Zhenjie Song (Leo) The Impact of Tariff and Non-Tariff Barriers International Trade Introduction In nowadays, tariff and non-tariff barriers have affected the trends and structure of international trade, the geographic direction, and importing and exporting countries relations (Stigler, 1971). This research paper mainly will talk about the tariff, non-tariff, and the relationship and impact of them. Tariff A tariff is simply a tax or duty placed on an imported good by a domestic government. Tariffs are usually levied as a percentage of the declared value of the good, similar to a sales tax. Unlike a sales tax, tariff rates are often different for every good and tariffs do not apply to domestically produced goods. Tariff could be an old and popular method of obtaining revenue from international business and economic activities. Generally, government levy tariffs for three main reasons. The first is that the tariff can protect fledgling domestic industries from foreign competition; the second is that the tariff can protect aging and inefficient domestic industries from foreign competition; the last reason is that the tariff can protect domestic producers from dumping by foreign companies or governments. Dumping occurs when a foreign company charges a price in the domestic market which is "too low". In most instances "too low" is generally understood to be a price which is lower in a foreign market than the price...
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...Barriers to International Trade- Non-Tariff Barriers and Infrastructure on freight transportation Intro Average applied tariffs on industrial products have declined from 15.5 per cent in 1990 to 7.9 per cent in 2003.[1] Yet, the volume of international trade is still less than one would expect from observed differences in factor endowments, tastes and technology between countries (Trefler, 1995). A possible explanation of the missing trade is non-tariff barriers to trade, including transport costs and other costs related to searching for international suppliers or customers, entering into contracts and shipping the goods or services from the domestic producer to the foreign customer. These transaction costs have several dimensions. First, there are the direct monetary outlays on communication, business travel, freight, insurance and legal advice. These are partly determined by the physical and cultural distance between the trading partners, but also the quality of infrastructure and the cost and quality of related services. EXAMPLE A second dimension of transaction costs is time. The proverbial "time is money" suggests a linkage between monetary outlays and the time dimension, but time also plays a role in its own right. This is particularly the case in industries that have adopted just-in-time business practices and have an international supply network. Just-in-time business practices imply that producers have small inventories of intermediate goods and the...
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...- Dimensions of market/country attractiveness ‘Fine-grained’ screening As the BERI index focuses only on the political risk of entering new markets a broader approach that includes the competences of the firm is often needed. For this purpose, a powerful aid to the identification of the ‘best opportunity’ target countries is the application of the market attractiveness/competitive strength matrix (Figure 7.4). This market portfolio model replaces the two single dimensions in the BCG growth–share matrix with two composite dimensions applied to global marketing issues. Measures on these two dimensions are built up from a large number of possible variables, as listed in Table 7.2. In the following, one of the important dimensions will be described and commented upon. - Market expansion strategies, incremental versus simultaneous entry A firm may decide to enter international markets on an incremental or experimental basis, entering first a single key market in order to build up experience in international operations, and then subsequently entering other markets one after the other. Alternatively, a firm may decide to enter a number of markets simultaneously in order to leverage its core competence and resources rapidly across a broader market base. Entry on an incremental basis, especially into small markets, may be preferred where a firm lacks experience in foreign markets and wishes to edge gradually into inter- national operations if a firm is small and has limited resources...
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...developing country is a poor or rich country. One of the benefits from globalization is that people believes it will improve the standard of living in a country. Furthermore, people also believes that globalization will be able to unite the world together. The advocates believe that economic and financial market integration will help create a greater economic stability. In addition, globalization could also help the developing country’s medical field. It has the potential to help produce and provide better medicine in a more effective and efficient manner to the people that needed it. Other than that, it also believes that due to globalization, trade barrier will be reduce in the existing market. When trade barriers been skim down, it will lead to increase in trade between the developing countries and other countries. These international trades will eventually lead to a greater growth that will bring benefit to the country. Last but not least, globalization are also expected to help in terms of economies of scale by lowering the transportation cost, communication cost and other cost by coming out with the solution of hiring foreign labors such as expatriates that will help the productivity to be more effective and efficient. 2. The Factors of Failed in Obtaining Started Benefits As good as globalization sounds, there are times when some countries fail to benefit from globalization. It was due to the asymmetric way of globalization. One of the failure in gaining global economic...
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..."Governmental attitudes towards Foreign Direct Investment Traditionally, FDI has been driven in substantial part by the need to invest behind tariff barriers. High trade barriers in a country create an incentive for investment to serve consumers of that country that does not depend on efficiency of the workforce, availability of world-class material suppliers, access to other markets, or the maintenance of an effective system of commercial law. When tariff and non-tariff barriers to trade are removed, investment decisions increasingly are made on the basis of the ability of the market to provide an environment that is conducive to the establishment and maintenance of a world-class manufacturing operation to serve the regional market and often to produce for worldwide export. Workforce availability, a stable economic system, and an effective legal system all assume greater importance in making investment decisions. Equally important is logistics - the ability to maintain a reliable, low-cost flow of raw materials and components into a manufacturing facility, and an effective system to distribute finished products flowing out of the facility. One of the myths that appear to be indestructible, despite growing evidence to the contrary is that of the generally positive and desirable nature of foreign direct investment (FDI). It is certainly seen as being preferable to other forms of foreign capital inflow, such as commercial borrowing and portfolio investment. Furthermore, it is considered...
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...1.0 Introduction Puma is one of the famous sports brand, the brand’s history can backward to World War Ι, Herzogenaurach Germany, 1948 by Rudolf Dassler. The major products covered almost all sport items, such as sport shoes, wears, and other sports equipment. The brand PUMA is the leader of football shoes. Puma is Olympic sponsors and partner of World formula championship tournament. Today the group has more than 9,500 employees and distributes its products more than 120 countries. Group holds three major sport brands, which are PUMA, COBRA, and Tretorn in sport industry market.(Puma, 2013). Business process outsourcing (BPO) is the key issue of today’s multinational corporation (MNC), which is considered as high chance to find out more opportunities and reduce cost. The main advantage of Business process outsourcing is that, which makes firms more flexibility, in one hand, which can help MNCs to reduce the fixed cost, as transferring into variable cost. In another hand, BPO is considered to be a good way to focus on firm’s core competencies. In addition, this process also may increase the speed of business processes. Based on these factors, BPO may help MNCs grow faster without the huge capital requested. At the same time, this process also brings limitations for MNCs, such as the higher risk level, which could be caused by both privately or structure of firm. Risks and treats of outsourcing must therefore be managed, to achieve any benefits. 2.0 Investment Market...
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...SHADOWS Prepared for Mr. Zia Imran Prepared by Samiullah khan 06l0365 Sarah Shah 06l0380 Jane 6, 2008 Table of Contents EXECUTIVE SUMMARY 4 THE OPPORTUNITY 5 THE COMPANY, ITS SERVICES AND STRATEGY 6 Company 6 Mission Statement 6 Vision 6 SWOT Analysis 7 Strengths: 7 Weaknesses: 9 Opportunities: 10 Threats: 11 MANAGEMENT 11 MARKETING STRATEGY 14 Product 15 Estimated Production Material: 19 FAB Analysis of Product 20 Pricing 21 Promotion 22 Website 24 Advertisement 24 Trade Shows 24 Australia( Trade Shows) 25 Kuwait( Trade Shows) 26 Placement 27 MARKET ENTRY BARRIERS 28 Tariff Barriers 29 Non Tariff Barriers 29 EXPORTING PROCEDURE 29 MODE OF EXPORTING 31 Advantages of Exporting 32 Disadvantages of Exporting 34 MODES OF PAYMENTS 34 Letters of credit 35 FINANCIALS 36 REFERENCES 42 APPENDIX 1 43 APPENDIX 2 47 APPENDIX 3 50 EXECUTIVE SUMMARY The company SHADOWS is aimed to manufacture and export wooden perfumed Blinds which would not only protect the consumers from the sunlight but also satisfy their aesthetic sense. There is much room for such unconventional products. The beauty lies in the making of the oriental product with the skilful hands, which certainly be having a high return and more demand. The geographical location of the host countries will make our product a necessity rather than luxury. Kuwait and Australia are the markets where...
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...Tariff and non-tariff barriers are two important barriers of international trade. These are one of the traditional forms of government interventions in the economic activity. Even today it is practiced by all the countries around the globe. The governments all over the world try to improve their economy by supporting domestic business, through the tariff and non-tariff barriers. Even though it supports domestic business over the foreign competition, it comes at the cost of the domestic consumer. The consumer is forced to pay heavy import duties for getting the quality products. Tariff and non tariff barriers are explained in the following paragraphs by stating how they are used in the global scenario and their importance in risk management of a country. Tariff barriers are the most common device used for regulating the imports. It is commonly called as import duty. A tariff is a tax levied on products by the country of importation. Tariffs are generally considered as the least restrictive international trade barrier and are classified in to two important categories namely Advalorem tariff and Specific or Flat tariff. The Advalorem tariff is the one which charges a particular percentage of the total value of the imported products. This type of tariffs is used for the products like crude oil which are not countable. The specific or flat tariff charges an amount based on the total number of units imported in to the country/region. These tariffs are used for the countable products...
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...* Tariff and Non-Tariff Barriers * Tariff and Non-Tariff Barriers * Until the mid-21st century most nations could put restrictions on imports from other * countries thus eliminating competition of certain goods within the importing nation. This is * called a tariff. The World Trade Organization (WTO) declared that tariffs represented a * violation of the WTO treaty and were to no longer be used by members of the WTO, but this * created non-tariff barriers. The following will describe tariffs and non-tariff barriers to trade, * why would a country impose any form of tariff, and examples of each. Both tariffs and non-tariff * barriers to trade have an effect global financing operations and managing risk. * Tariffs According to Hill (2009), “a tariff is a tax levied on imports.” A tariff is Japan placing a tax on steel; for every pound of steel imported into Japan the nation exporting the steel would have to pay this tax. The problem with tariffs is it restricts free trade. Because of this restriction of trade lead to the creation of General Agreement on Tariffs and Trade and its successor, the WTO. WTO promotes free trade by limiting the ability of national governments to adopt policies that restrict imports into their nations. Some nations believed a tariff was in the best interest of his or her nation. * A tariff does some positive things for a nation imposing the tariff. A tariff would eliminate competition of a certain...
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...Tariff barriers Tariffs, which are taxes on imports of commodities into a country or region, are among the oldest forms of government intervention in economic activity. They are implemented for two clear economic purposes. First, they provide revenue for the government. Second, they improve economic returns to firms and suppliers of resources to domestic industry that face competition from foreign imports. Tariffs are widely used to protect domestic producers’ incomes from foreign competition. This protection comes at an economic cost to domestic consumers who pay higher prices for import competing goods, and to the economy as a whole through the inefficient allocation of resources to the import competing domestic industry. Therefore, since 1948, when average tariffs on manufactured goods exceeded 30 percent in most developed economies, those economies have sought to reduce tariffs on manufactured goods through several rounds of negotiations under the General Agreement on Tariffs Trade (GATT). Only in the most recent Uruguay Or Simply Import duties or taxes imposed on goods entering the customs territory of a nation. Imposes for revenue collection, protection of domestic industry, political control. Non Tariff Barriers Nontariff barriers (NTBs) refer to the wide range of policy interventions other than border tariffs that affect trade of goods, services, and factors of production. Most taxonomies of NTBs include market-specific trade and domestic policies affecting...
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...converted into another” (Hill, 2009, p. 324). This assignment will define the tariff and non-tariff barriers, the impact in the operations of the global financing and the managing risks. Tariff and non-tariff barriers Tariff is a “tax levied on import (or exports)” (Hill, 2009, p. 6). There are different types of tariff. There are specific tariffs where the price never changes, is always the same. The revenue tariff who raise the money for the government The prohibitive tariff is the one that the price is so high that nobody imports or export with that type of tariff. The protective tariff price of the imports goods and keep their domestic industries save from the competition. The environmental tariff is like the protective tariff but is relate to the environmental. The last one is the retaliatory tariff, already have charges against the country. The non-tariff barriers (NTBs) is the one that will have restrictions for any imports. Some examples are packaging and labeling conditions, products standards, quotas (specific) for the product, licenses for import goods, and sanitation conditions. There are three categories of non-tariff barriers. The first category is the restrictions for imports goods that include the licenses and the import quotas, the import prices (minimum) and deposit, etc. The second category is the methods that there are not directly related with any foreign trade. For example sanitary, technical norms, procedures, bottling, etc. The third...
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...A Tariff can be generalized as a comprehensive tax on goods that are imported from foreign countries. The goal of a tariff is to secure the domestic product of a given nation from cheaper goods which are imported from nations that have a larger producing capacity. Tariff also helps to balance the prices in a country. Issues that may arise from tariff can be double sided. In other words, tariff has the power to bring businesses and governments down to instant financial security (Wikipedia, 2007). There are many different tariffs in which each is designed for a specific operation. The most notable tariffs are the protective tariff, the revenue tariff, and the prohibitive tariff. The protective tariff was enacted to inflate the prices set by imported products which create a positive vacuum for domestically based industries. This type of tariff places high tax on foreign imports which in turn forces a given company to raise its prices above its competitors who are based domestically. The revenue tariff is designed to generate and accumulate large amount of finances for the government. An example of such tariff would be a country that has very little product. In order to keep the domestic gains strong the government will need to install tariff on the imported goods which will levy the prices. This act by the government creates a security blanket for the limited product of certain import goods. The prohibitive tariff is the worst tariff to use in a global market today. This type...
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...WHAT IS GLOBAL/INTERNATIONAL TRADE? Global trade is the exchange of capital, goods, and services across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP). While international trade has been present throughout much of history (see Silk Road, Amber Road), it’s economic, social, and political importance has been on the rise in recent centuries. Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing are all having a major impact on the international trade system. Increasing international trade is crucial to the continuance of globalization. Without international trade, nations would be limited to the goods and services produced within their own borders. International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not. The main difference is that international trade is typically more costly than domestic trade. The reason is that a border typically imposes additional costs such as tariffs, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. Another difference between domestic and international trade is that factors of production such as capital and labor are typically more mobile within a country than across countries...
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...International Trade 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...
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...Project on Collection and Quantification of Non-Tariff Measures (NTMs) and national regulation Bangkok, Thailand Anders Aeroe Chief, Market Analysis Section Division of Product and Market Development 29 January 2008 Background In general, tariffs are declining as a result of multilateral and regional trade liberalisation, leaving Non-Tariff Measures (NTMs) and other trade barriers as the major obstacles to trade. These non-tariff barriers are often designed to meet certain specific policy objectives of a country such as technical standards requirements. In the process, the trade and development performance of other countries are however adversely affected as a result of such barriers. The problem is compounded for developing countries, which have difficulties to access information on these barriers and to comply with the requirements. In practice, it has also been proven difficult to analyse non-tariff measures and other barriers to trade in a very effective manner due to a lack of a common definition, inadequate data and an agreed methodology for quantifying them. It is against this backdrop that the Secretary General of UNCTAD has mandated a Group of Eminent Persons on Non-Tariff Barriers (GNTB) to work on the issue of NTBs. A Multi-Agency Support Team comprising of the World Bank, FAO, IMF OECD, UNIDO, WTO, UNCTAD and the International Trade Centre (ITC) has been tasked to provide the necessary technical support to the Group. Objectives The project will provide an...
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