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Trading Restrictions

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Submitted By amyfeng123
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Pages 6
Economy Paper on Trading Restrictions
Political structure is an important variable facing global marketers. Government policies run the scope from no private ownership and minimal individual freedom to little central government and maximum personal freedom. As rights of private property increase, government-owned industries and centralized planning tend to decrease. But political environment is rarely at one extreme or the other. Legal considerations are closely related with the political environment. In France, nationalistic sentiments led to a law that requires pop music stations to play at least 40 percent of their songs in French; even though French teenagers love American and English rock and roll. Many legal structures are designed to either limit or encourage trade. Today, I’m going to talk about the most used trading restrictions: Tariff and Quota.

First, I want to exemplify the importance of trade restrictions for imports, as well as exports by showing what happened in the U.S. Motor industry. In 1980 the United Auto Workers(UAW) and Ford Motor Company petitioned the International Trade Commission(ITC) to recommend relief from import competition. During the first half of that year, foreign companies shipped 1.2 million passenger cars to the United States, increased 21 percent compare to previous year. The foreign share of the U.S. new car market increased from 17 percent to 25 percent in that period. This caused a huge breakdown in U.S. Motor Market. For example, Chrysler made huge losses and was forced to sell most of its foreign subsidiaries. Ford Motor made even larger losses. General Motors had to borrow large sums to keep the company running. By the end of 980, 193,000 out of 730,000 members of the UAW were unemployed. The problems of the motor industry were due to a shift in demand to small, fuel-efficient cars caused by higher petrol prices.

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