Dr.

Muslima Zahan
Assistant Professor
School of Business and Economics
North South University
Dhaka, Bangladesh
Summer 2020
 Whether a national government should
intervene to protect the country’s domestic
firms by taxing foreign goods entering the
domestic market or construction other
barriers against imports
 Whether a national government should

directly help the countries domestic firms

increase their foreign sales through export
subsidies, government-to-government
negotiations and guaranteed loan programs.
 Free Trade
 Fair Trade or managed trade
 The national defense argument holds that a
country must be self-sufficient in critical raw
materials, machinery and technology or else
by vulnerable to foreign threats.
◦ The infant industry argument
◦ Maintenance of existing jobs
◦ Strategic Trade Theories
 A national government can make its country better off
if it adopts trade policies that improve the
competitiveness of its domestic firms in such
oligopolistic industries
 Payoff Matrix
 Toshiba

Develop Do not develop

-1 0
Develop
10
AREVA -1
10 0
Do not
develop 0 0
Toshiba

-1 0

-1+2=+1 10+2

AREVA 10 0

0 0
 Economic Development Program- Dubai Hub
◦ Export promotion strategy
◦ Import Substitution strategy
 Industrial Policy
 Public Choice Analysis

-special interest group

 Tariff
◦ Ad valorem tariff-% of the market value of the imported
good.
◦ Specific tariff-specific dollar amount per unit of weight or
other standard measure.
◦ Compound tariff- has both
Harmonized tariff schedule (HTS)-low tariff for cross
country product
Two reasons to impose tariff:
 it raises revenue
 it acts as trade barrier.
 Non-tariff Barriers
◦ Quota
◦ Numerical export control-voluntary export restraint (VER)
◦ Other non-tariff-local purchase, regulations, currency etc.
 Subsidies-development incentives
◦ The concerns expressed by US and EU politicians
that Huawei has benefited from subsidies granted
by the Chinese government
 Foreign Trade zones
 Export Financing Program
. Fiscal Incentives
1.      10 years tax holiday for the Industries to be established before 1st
January, 2012 and
     
2. Duty free import of construction materials
3.      Duty free import of machineries, office equipment & spare parts
etc.
4.      Duty free import and export of raw materials and finished goods
5.      Relief from double taxation
6.      Exemption from dividend tax
7.      GSP facility available
8.    Accelerated depreciation on machinery or plant allowed
9.    Remittance of royalty, technical and consultancy fees allowed
10.    Duty & quota free access to EU, Canada, Norway, Australia etc
 Countervailing Duties-advalorem imposed by
importing country
 Antidumping Regualtions