A
trade barrier
is a general term that describes any government policy or regulation thatrestrictsinternational trade. The barriers can take many forms, including:
•
•
•
•
•
•
•
•
•
Local Content RequirementsMost trade barriers work on the same principle: the imposition of some sort of coston
trade that raises the price of the traded products. If two or more nations repeatedly use
trade barriers against each other, then atrade war results.Economists generally agree that trade barriers are detrimental and decrease overalleconomic efficiency, this can be explained by thetheory of comparative advantage. In
theory,free tradeinvolves the removal of all such barriers, except perhaps thoseconsidered necessary for health or national security. In practice, however, even thosecountries promoting free trade heavily subsidize certain industries, such asagriculture and steel. Examples of free trade areas are: North American Free Trade Agreement
(NAFTA),South Asia Free Trade Agreement(SAFTA),European Free Trade Association,
European Union(EU),Union of South American Nations.Other trade barriers include
differences in culture, customs, traditions, laws, language and currency.
International Trade
Barriers to International Trade
International Trade
o
o
o
o
o
Barriers to International Trade
o
Free trade refers to the elimination of barriers to international trade. The mostcommon barriers to trade are
tariffs
,
quotas
, and
nontariff barriers
.A tariff is a tax on imports, which is collected by the federal government andwhich raises the price of the good to the consumer. Also known as duties or
import duties, tariffs usually aim first to limit imports and second to raiserevenue.A quota is a limit on the amount of a certain type of good that may beimported into the country. A quota can be either voluntary or legally enforced.
EconoTalk
A tariff is a tax on imported goods, while a quota is a limit on the amount ofgoods that may be imported. Both tariffs and quotas raise the price of andlower the demand for the goods to which they apply. Nontariff barriers, suchas regulations calling for a certain percentage of locally produced content inthe product, also have the same effect, but not as directly.
EconoTip
You may wonder why a nation would ever choose to use a quota when a tariffhas the added advantage of raising revenue. The major reason is that quotasallow the nation that uses them to decide the quantity to be imported and letthe price go where it will. A tariff adjusts the price, but leaves the post-tariffquantity to market forces. Therefore, it is less predictable and precise than aquota.The effect of tariffs and quotas is the same: to limit imports and protectdomestic producers from foreign competition. A tariff raises the price of theforeign good beyond the market equilibrium price, which decreases thedemand for and, eventually, the supply of the foreign good. A quota limits thesupply to a certain quantity, which raises the price beyond the marketequilibrium level and thus decreases demand.Tariffs come in different forms, mostly depending on the motivation, or ratherthe stated motivation. (The actual motivation is always to limit imports.) Forinstance, a tariff may be levied in order to bring the price of the imported goodup to the level of the domestically produced good. This so-called scientifictariff—which to an economist is anything but—has the stated goal ofequalizing the price and, therefore, “leveling the playing field,” between foreignand domestic producers. In this game, the consumer loses.
A peril-point tariff is levied in order to save a domestic industry that hasdeteriorated to the point where its very existence is in peril. An economistwould argue that the industry should be allowed to expire. That way, factors ofproduction used by that inefficient industry could move into a new one wherethey would be better employed.A retaliatory tariff is one that is levied in response to a tariff levied by atrading partner. In the eyes of an economist, retaliatory tariffs make no sensebecause they just start tariff wars in which no one—least of all the consumer—wins.Nontariff barriers include quotas, regulations regarding product content orquality, and other conditions that hinder imports. One of the most commonlyused nontariff barriers are product standards, which may aim to serve as“barriers to trade.” For instance, when the United States prohibits theimportation of unpasteurized cheese from France, is it protecting the health ofthe American consumer or protecting the revenue of the American cheeseproducer?Other nontariff barriers include packing and shipping regulations, harbor andairport permits, and onerous customs procedures, all of which can have eitherlegitimate or purely anti-import agendas, or both.
Multinational corporation
From Wikipedia, the free encyclopedia
Jump to:navigation, search
A
multinational corporation
(or transnational corporation) (MNC/TNC) is acorporation or enterprise that manages production establishments or delivers services in at least two
of 00
International Business
2,125 Reads
Info and Rating
| Category: | Uncategorized. |
| Rating: | |
| Upload Date: | 09/12/2009 |
| Copyright: | Attribution Non-commercial |
| Tags: |
Leave a Comment