...Tariff and Nontariff Barriers to Trade Scott Jaeger MGT/448 November 16,2015 Lara Dickerson Tariff and Nontariff Barriers to Trade Since the beginning of trade between countries or regions, there have been barriers that have deterred, or prevented the trade of goods between countries or regions. These barriers are put into two different categories. First, there are tariff barriers, these include taxes and quotas put on imports by the country receiving the goods. The other barriers to trade are the nontariff barriers. These barriers include such things as bans on imports, import licenses, and “buy national” policies, along with a slew of other deterrents to trade. In this paper, the differences between these two barriers will be discussed, along with how these barriers are used in global finance, and their importance in managing risk. Tariffs and Quota’s Tariffs To put it the simplest terms possible, tariffs are taxes imposed by a country in order to raise the price of imported goods and services. There are a couple of different reasons that a country may use tariffs, depending on the countries that they are trading with, and the goods or services involved in the trade, but essentially, “The idea is to increase demand for domestic products while reducing the volume of imports.” (Sanders, 2015). Countries may want to promote the domestic products or services in the same trade, or they may also simply want to make money. While tariffs can certainly benefit the...
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...Explain the international business environment in which a selected organization operates Define international trade International trade refers to the purchasing of goods and services across the international terrains. Furthermore in many countries, this trade subsidizes substantially to the Gross Domestic Product while for the companies involved it contributes a lot to their total revenue and profits. The economic, political, and social importance of this trade is increasing every day. What do you consider to be the importance of international trade to business/individuals/economies? Numerous factors contribute positively to international businesses/trade these consist of industrialization and globalization. International trade is an important part to globalization, and without it, countries will produce limited goods and services that may limit their economies to expand for the greater good, this is because their market will be limited within the borders it will be hard to export goods which may be vital to their countries for example medicine ,coffee and so on. International trade is related to domestic trade only that it has more associated costs and legislation. The costs include tariffs and transportation costs while the legislation barriers they face is being discriminated in order to protect domestic industries. It is costly to hire and use factors of production across borders; thus international trade rarely trades factors of production but trades in goods and services...
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...International business comprises all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more regions, countries and nations beyond their political boundaries. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons.[1] It refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc 1. The exchange of goods and services among individuals and businesses in multiple countries. 2. A specific entity, such as a multinational corporation or international business company that engages in business among multiple countries. Export policies Bangladesh’s exports are dominated by ready made garments, most of which are exported to the US and the EU. Nearly all garment exports are from firms operating in export processing zones or as bonded warehouses. In both cases they can import their textile and other inputs free of Customs duties and all other import taxes (including the 3% advance income tax) with the use of “back-to-back LCs” i.e. letters of credit based on LCs issued for their exports. As noted previously, machinery used by exporters is also exempt from all import taxes...
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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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...Helms-Burton dispute to the WTO. The EU took the Helms-Burton dispute to the WTO because they felt that it violated international rules dealing with trade. The EU had a dispute with the U.S. regarding testing agriculture, trade and investments and biotechnology issues which were brought to the attention of the WTO found the following: The EU, concerned about the effect of the North American Free Trade Agreement (NAFTA), proposed a Transatlantic Free Trade Agreement (TAFTA) in 1994, and the U.S.-somewhat reluctantly-went along. There was to be no TAFTA to complement NAFTA, however: only a renewed political gesture in the form of the 1995 New Transatlantic Agenda (NTA) ("EU/US Summit,”). Its main lasting effect was the Transatlantic Business Dialogue (TABD), the first transatlantic lobby, which brought about agreements on testing and certification as a step toward defining a new trade agenda. It also envisioned the creation of a New Transatlantic Marketplace (NTM) within which trade barriers between the U.S. and EU would be largely dismantled.(Padgett,2009) Continuously diluted, in 1998 the NTM became today's Transatlantic Economic Partnership (TEP), a limited agreement slighting key issues, particularly agriculture, audiovisual services, and culture. This failure to develop substantive transatlantic regulations means reliance on the World Trade Organization's (WTO) dispute settlement process for airing differences. As the cold war settled down in 1990, the U.S. rebuffed EU calls for...
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...International trade ECO/372 International trade International trade is essential to a country for importing and exporting their goods and services around the world. The United States is one of the largest countries involved in international trade and finance. A country’s surplus or a deficit affects the supply and demand of the good or service. International trade effects gross domestic product of a country and therefore the entire economic outlook of the nation and this could cause a ripple effect on other nations as well. Trade barriers such as restrictions, tariffs, and quotas can greatly affect the trade between two nations and should be carefully considered. The Unites States has had a tumultuous trade relationship with China and various barriers have been considered and put in place from both countries.Foreign exchange rates also affect countries based upon the value of currency exchange and how much money purchases how much of a good or service. Import Surplus Impact One of the biggest competitors when it comes to the international trade is Japan. The Dell and Toshiba corporations are well known for the competition between the two countries. International trade has increased since the World Trade Organization (WTO) came into existence. The WTO has pushed countries more for competition and to increase their gross domestic product. International trade allows countries to do more business and have access to a larger variety of goods and services. Comparative...
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...and how it affects our country and community. There are many ways to look at globalization but you must first understand what the traditional international trade theories are and what the drivers are. Once you have these information we can form an example of how globalization affects are economy. First we are going to define what is a globalization? What is a Globalization? “And we are moving toward a world in which barriers to cross-border trade and investment are declining; perceived distance is shrinking due to advances in transportation and telecommunications technology; material culture is starting to look similar the world over; and national economies are merging into an interdependent, integrated global economic system” (Hill, 2013, p4 ). With the advancement of technology the barriers have been torn down like the “Wall of Berlin”. It has opened our minds to learn about other cultures and to learn about potential business opportunities in those countries. Two of the traditional international trade theories are classical and modern. Major Drivers of Globalization There are two major drivers of globalization. The first is the decline in barriers which allows for the free flow of goods, services and capital. The examples of this driver is the International trade and foreign direct investment. International trade is selling goods in your country to someone in another country. Foreign direct investment is investing in companies that are not in your home country. We...
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...Impact of WTO on Globalization Trade Policy Introduction World Trade Organization (WTO), found in 1995 and headquarters is in Geneva, has its clearly main purposes since its beginning that to promote economic and trade development all over the world. Up to the end of 2008, there are more than 135 members in the organization. In particularly, with the expansion of globalization trade, international business is more often than any time in the history. As one of the most crucial carrier of economic globalization, WTO establishes a set of international trade rules focusing on the liberalization, which play a strong role of encouraging and guiding in the process of economic globalization (Pauwelyn, 2005). This essay will mainly discuss WTO’s influence on the rules of globalization trade in combination with the current reform of trade policy. It will explain the topic from the following four aspects in detail: first, the basic rules WTO set up for the international trade, then, rules on e-commerce, the new rising global business, third, the preferential rules made by WTO for developing countries, and at last, it will discuss the impacts of WTO’s regulations on environmental issues when doing global trade. Basic Rules WTO set up for the Global Trade WTO's main objective is to provide adequate competitive opportunities for the trade among the members, which needs recognized common rules and principles for members to abide. There are two basic principles, namely the MFN principle (referred...
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...Table of Contents At a glance 2 Company Overview 3 SWOT Analysis 4 Entry Strategies 6 Entry Restrictions8 Political and Cultural Values................................................................................15 Economical Conditions..........................................................................................16 Extrinsic and Intrinsic Motivational and Hygienic Factors..............................17 CSR Programs.......................................................................................................18 Marketing MIX......................................................................................................20 IMC Campaign......................................................................................................28 Contingency Strategies..........................................................................................29 Reference................................................................................................................30 AT A GLANCE Name: Hewlett-Packard Company Type: Public Traded as: NYSE: HPQ S&P 500 Components Industry: Computer hardware Computer software IT services IT consulting Founded: January 1, 1939 Founder(s): Bill Hewlett, Dave Packard Headquarters: Palo Alto, California, United States Area served: Worldwide Key people: Ralph Whitworth (Interim Chairman) ...
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.... Fair trade is an example of how world trade can and should be run to tackle poverty. Producers are all small scale and must be part of a cooperative or democratically run association of workers who observe high social and environmental standards. Selling some produce to the "fair trade" market that cushions them from depressed world commodity markets and the price wars between giant multinationals. The price difference can be as much as 100% .At the other end of the chain, the first-world consumer pays about a penny extra for goods. Fair trade shows that charity is not needed to lift people out of poverty and that social and environmental standards can be put into trade. Fair trade means you believe there are some rules in trade that must be placed in order to provide for producers who have disadvantages in a free market. (Free – no barriers, fair –rules) 2. It as a situation in which goods come into and out of a country without any controls or taxes. Countries which fully believe in free trade take away barriers to trade. They have open borders and few controls of goods at customs. There are two major barriers: tariffs and subsidies. Countries which open their markets usually have a policy of deregulation, that's to say, they free their companies to compete in markets, without government control or subsidies. Because of this, consumers in free trade areas are offered a wider range of high-quality products at lower prices. 1. In my opinion, the best candidate for the...
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...interdependency (Stanford Encyclopedia of Philosophy, 2010). Globalization refers to the shift toward a more assimilated and interdependent global economy. Globalization possesses many diverse aspects including the globalization of production and the globalization of markets (Hill, 2009). Explaining the patterns of international trade, is not easily done using any single theory, the combination of the theories of, Mercantilism, Life-Cycle, Free Trade, New Trade and Porter's Theory do propose which influences are of importance to the international trade market and back the idea of globalization. Diminishing trade and investment obstacles, communication, technology, and demographic changes are the ultimate contributors to globalization. Trade barriers are being reduced, and have shifted the global economy from being primarily closed end to a more open end. The lowering of barriers to international trade enables firms to view the world, rather than a single country, as their market (Hill, 2009). Also, globalized production is a product of the trade barriers lowering in the past 60 years. According to data from the World Trade Organization, the volume of world trade has grown faster than the volume of world output since 1950 (Hill, 2009). Technology and communications have drastically increased with the accessibility of the internet, computer data bases, cellular...
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...MASTER IN BUSINESS ADMINISTRATION INDIVIDUAL ASSIGNMENT SUBJECT: MANAGING IN THE ECONOMY SUBJECT CODE: MGT6233 NAME : GIRISH S/O GOPAL 810602 -01 – 6275 I/C : STUDENT ID : 01130024 LECTURER : MS.SANDRAKALA 2 Executive summary Free trade refers to trade between countries without tariff and non-tariff barriers on exports and imports. In another word, free trade refers to trade without government interference. Classical economists such as Adam Smith and David Ricardo have advocated that free trade improves the economic well being of a country by increasing the production of a country and allowing efficient allocation of resources, thus increasing global production and promoting peaceful and prosperous global environment. In the global basis, World Trade Organization formed after GATT in 1995 promotes trade liberalization through multilateral negotiation. On the other hand, in the regional basis, countries are forming regional economic integration to promote free trade stage by stage. The initial stage is known as Free trade areas (FTAs) under which they agree to remove tariffs and non-tariff limitations on trade in products between themselves. Despite all these initiates, governments around the world are still imposing various restriction on trade between countries to protect its own industries such as agriculture which is considered as the backbone of a country. Therefore, this report will discuss the concept of free trade, trade theories...
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...Quiz Review Word Bank 1. Fair trade 2. Guanxi Connections usually referring to government contacts and influence. 3. ATC In 1994, as a result of the Uruguay Round of negotiations, GATT was absorbed into the WTO. The WTO also absorbed the MFA, which was replaced by the ATC. The purpose of the ATC was to phase out the MFA and its quota system over ten years. 4. Free trade a agreements (FTAs) 5. Intellectual property rights The WTO is not just about liberalizing trade. In some circumstances its rules support maintaining trade barriers, for example protecting intellectrual property rights, patents, trademarks, and copyrights, but it is difficult to protect them from unscrupulous business from other countries. 6. NTBs In recent years, however, the United States-as well as most countries world-wide, has established bilateral or multilateral free-trade agreements (FTAs) between two or more countries to eliminate tariff and non-tariff barriers affecting trade among themselves. 7. Portfolio Investment It is a non-controlling interest in a venture made in the form of either debt or equity. 8. SMEs It benefits from the tariff-eliminating provisions of free trade agreements, and should benefit from the significant tariff cuts required under the CAFTA-DR. The transparency obligations, particularly those contained in the customs chapters, are also very important to SMEs, which may not have the resources to navigate customs and regulatory...
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...international trade, and what the benefits of international trade are. US Trade Patterns Imports are the goods and services that we buy from people and firms in other countries. Imports represent 18% of total GDP. Exports are the goods and services that we sell to people, firms, and governments in other countries. The U.S is the world's largest exporter, but exports represent a small fraction of total output. The trade balance is the difference between the value of exports and imports. When imports exceed exports we have a negative trade balance called a trade deficit. The opposite is a trade surplus. Motivation to Trade Specialization increases total output. Without imports a country cannot consume more than it produces. Because just by changing the mix of output in at country total world output increases, that country has a motivation to trade. This works because when nations specialize in production, they can export one good and import another and end up with more total goods to consume than they had without trade. PURSUIT OF COMPARATIVE ADVANTAGE The ability of a country to produce a specific good at a lower opportunity cost than its trading partners is called comparative advantage. Nations export goods with relatively low opportunity costs, and import goods with relatively high opportunity costs. Some countries may have absolute advantage, that is, the ability of to produce a specific good with fewer resources than other countries. TERMS OF TRADE Terms of...
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...benefits it provides. The bigger the range the business can expand to, the greater the success the business will achieve to sell its products or services to. By offering a product overseas the business can offer different types of discounted prices for their services. This is turn will save the business an abundance of revenue. In every country a product or service is used daily without a second thought by the consumer as were that product or service originated from. Globalization is the norm and is expected by a wide varied of consumers. Globalization is a process of interaction or integration among people, businesses, and governments of different countries or nations. Globalization is a driven process developed with international trade and investment and aided by information technology. Globalization has effects on the environment, culture, political systems, on economic development. The two types of globalization are globalization of markets and globalization of products. Globalization of markets are merging of historically distinct and separate national markets into one huge marketplace. Globalization of products refers to the sourcing and out sourcing of goods and services from around the world to take advantages of the different product markets. Some of the international trade theories that support globalization includes the ability to gain a larger market share and free trade. Most businesses realize that doing business globally can significantly its profits and benefits...
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