Presentation on theme: "2.02 Exemplify how and why nations develop trade barriers and support export activities Protectionism."— Presentation transcript:
2.02 Exemplify how and why nations develop trade barriers and support export activities Protectionism
Why limit international trade? Trade barriers - government placed restrictions Infant industry argument - based on idea that developing/emerging industry needs time to become globally competitive Ex) In 1980’s Brazil tried to protect new computer industry against imported computers. Question - how long protection should be kept in place?
Why limit international trade? (con’t) National security argument - based on idea that a country does not want to become dependent upon other countries for products Ex) Japan restricts import of foreign rice at low market prices to protect domestic rice farmers – it does not want to be dependent upon other countries for this main food source.
Why limit international trade? (con’t) Free trade favors rich countries argument – based on idea that large, developed countries have comparative advantages in many areas. Canadians wary of US dominating their media market. France has worked to protect its TV and film industry from US domination
Commercial Policies Commercial policies - regulations & restrictions countries use to control international trade. Tariff (customs duty) –tax placed on imported/ exported products; one of most common tools to control trade. It also is a source of revenue Import tariff – taxes placed on goods coming into a country. Ex) The Philippine government placed tariffs on imported Harley-Davidson motorcycles to protect their domestic motorcycle industry. Ex) US has put 300% tariff on certain varieties of French cheese in the past. stink-over-u-s-tariff-on-roquefort-cheese_newshttp://www.dailymotion.com/video/xfxlcn_french-farmers-raise- stink-over-u-s-tariff-on-roquefort-cheese_news CBC news clip LNWorking
Commercial Policies (con’t) Tariffs help ensure imported products not sold for less than domestic products. - show duty on coffee, section 2, chapter 9 Export tariff – taxes placed on goods leaving a country & often used as revenue Used by countries such as Argentina, Indonesia & Malaysia for certain agricultural products. US does not use export tariffs.
How an exporter can determine their product’s tariff in another country… hz9t6KTFQ Video clip from International Trade Administration’s Free Trade Administration (FTA) tariff tool for exporters Sweater activity…
Commercial Policies (con’t) Import quotas – restrictions on amount of product that can be imported into country. Ex) In 1981, Japan voluntarily restricted number of cars exported to the US. Purpose was to give US automakers time to retool for production of fuel-efficient cars, but they used profits for other ventures. Since there was not a limit on dollar value of exports, Japanese auto makers then exported larger, more profitable cars, & used profits to build car plants in US. Ex) US sugar industry is presently protected by combination of tariffs & quotas.
Commercial Policies (con’t) List of products/countries with quotas with Customs Border Patrol e_programs/textiles_and_quotas/guid e_import_goods/commodities.xml
Commercial Policies (con’t) Embargo - ban of commerce & trade with another country or group for various reasons. Ex) US presently has embargos against Cuba, Iran, Sudan and Syria Ex) 1973 oil embargo by Organization of Arab Petroleum Exporting Countries (OPEC) OPEC refused to sell crude oil to Europe & US Gas prices increased from 38.5¢ to more than 55¢ per gallon ies/index.html Embargo activity…http://www.pmddtc.state.gov/embargoed_countr ies/index.html Assign country, find the effect date and what the embargo addresses. Present to class
Commercial Policies (con’t) Boycott - type of embargo used by participants that believe an organization has done something morally wrong Naturewatch has long-standing boycott against French multinational L’Oreal for continued use of animal testing for cosmetics Vegetarians International Voice for Animals (VIVA) has boycott against German-owned Adidas for using kangaroo skins in some types of football boots eticket=cOrT55txMvI%3d&tabid=123 Boycott activity…use the above link for file
Commercial Policies (con’t) Non-tariff barriers - often based on legislative rules & regulations related to product. Ex) Europe requires GM food products be labeled as “genetically modified”. Voluntary export restraints - limit the total amount of products exported. Ex) China has voluntarily limited total amount of textiles exported to US. Ex) Japan has voluntarily limited total number of cars exported to US
Commercial Policies (con’t) Dumping - when countries export & sell their products for less than cost of production. Ex) Japan & Brazil were accused of dumping steel in US. Ex) China was accused of dumping steel fasteners in EU.
Commercial Policies (con’t) Predatory pricing - lowering of price to gain market share. Dumping is type of predatory pricing. Ex) Products include steel, textiles, televisions, computers, hardware and farm crops. Ex) China has been primary target for anti-dumping complaints. International Trade Commission (ITC) – current investigations of dumping cvd/investigations/active/index.htm#safeguard cvd/investigations/active/index.htm#safeguard
Export Support Systems Export support systems - developed by countries to encourage exporting Indirect support activities used by governments to support sale of exports. Special trade fairs & trade events. The US Commercial Service as part of US Department of Commerce, sponsors events for US businesses. Consulates are government appointed officials from one country that reside in another country to represent interests of appointing country’s citizens.
Export Support Systems (Con’t) Export subsidies - payments made by governments to support export of products Direct export subsidies lower price of exported product & can include payments made directly to exporter by government. Low interest loans may be offered by government Used by US government and European governments for exported farm products
Export Support Systems (Con’t) Indirect export subsidies - support exporting in roundabout way. Boeing & Airbus receive help from their governments in research & development of their planes. This lowers internal costs to companies helping to keep prices lower for their planes & to compete globally
Export Support Systems (con’t) Home page of US Commercial Service, part of Dept. of Commerce po&feature=relmfu US Commercial Service – federal export support video
In Conclusion: obBwvcUU 5 minute clip on Customs Border Protection trade overview