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Lecture overview
Introduction Barriers to international trade a continuing debate Macro level barriers to international trade
Tariff barriers Non-tariff barriers
Learning outcomes
Understand the various trade opportunities that exist among countries Understand why there are trade barriers in a growing open free market Explain the importance for countries to protect their domestic products and their countries market mechanism and macro needs Explain why many different kinds of trade barriers are in existence today despite the WTOs efforts to bring about a more liberalised international trading environment
Learning outcomes
Discuss the fundamental difference between tariff and non-tariff barriers to trade Describe the two main ways of applying a tariff Give brief explanations of each of the types of tariff and non-tariff barriers Discuss some of the regulatory measures that can act as barriers to trade Offer an opinion as to when each of the regulatory measures might be justified Give examples of company level barriers to international trade
Why the WTO and others advocate less restricted international trade
Why all governments impose trade barriers to a greater or lesser extent How much restriction/ intervention is prudent or necessary.
Non-tariff barriers
A range of non-tariff related deterrents/ obstacles to international trade activity.
Export tariffs
Mainly used to discourage / limit the export of particular products.
Advantages of protectionism
Disadvantages of protectionism
Tends to encourage inefficiency at industry level and discourages innovation Makes imported manufacturing inputs more costly which can affect producers price competitiveness Makes imported goods more expensive for the consumer (especially the poor).
Specific tariff
= fixed monetary amount per unit of a trade item
E.g. R100 per R2 000 product = R100 customs duty
Criteria by which the country of origin of a product (inputs + degree of processing) can be determined
Capacity constraints
Insufficient human resources, technical and managerial talent, and experience in an organisation which leads to slow output / sub-standard performance
Time constraints
A common problem faced by business people today which can lead to production deficiencies, communication problems and stress
Financial constraints
A shortage of funds or difficulty of accessing capital to pursue a business venture.
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