Formulation of National Trade Policies

24 Agu
§Chapter 9:
of National Trade Policies
§International Business, 4th Edition
§Griffin & Pustay
§Chapter Objectives_1
§Present the major arguments in favor of and against governmental intervention in international trade
§Identify the advantages and disadvantages of adopting an industrial policy
§Describe the major tools countries use to restrict trade
§Chapter Objectives_2
§Analyze the role of domestic politics in formulating a country’s international trade policies
§Specify the techniques countries use to promote international trade
§Explain how countries protect themselves against unfair trade practices
§Issues on Trade Intervention
§Should a national government intervene to protect the country’s domestic firms by taxing foreign goods entering the domestic market or constructing other barriers against imports?
§Should a national government directly help the country’s domestic firms increase their foreign sales through export subsidies, government-to-government negotiations, and guaranteed loan programs?
§Free Trade or Fair Trade?
§Free trade –minimal influence from government
§Fair trade – active intervention from government (managed trade)
§Industry-Level Arguments
§National Defense Argument
§Infant Industry Argument
§Maintenance of Existing Jobs
§Strategic Trade Theory
§National Defense Argument
§Country must be self-sufficient in critical raw materials, machinery, and technology or else be vulnerable to foreign threats
§Appeals to general public
§Protects steel, electronics, and machine tools industries, and merchant marines
§Infant Industry Argument
§Imposition of tariffs to give U.S. firms temporary protection from foreign competition until firms are fully established
§Powerful economic development strategy
§Which industries should be protected? For how long?
§Maintenance of Existing Jobs
§Jobs in high-wage countries threatened by imports from low-wage countries
§Forms of assistance
§Strategic Trade Theory
§National Trade Policies
§Economic Development Programs
–Export promotion strategy
–Import substitution strategy
§Industrial Policy
–Key domestic industries chosen, protected, and promoted
§Public Choice Analysis
–Consumers versus special interest groups
§Boeing believes that loans given to Airbus by European governments
to fund the A380’s research and development constitute a violation of international trade rules
§Map 9.1 An Effect of the Jones Act
§Barriers to International Trade
§Tariff barriers
–Export tariff
–Transit tariff
–Import tariffs
•Ad valorem
§Non-tariff barriers
–Numerical export controls
–Product and testing standards
–Restricted access to distribution networks
–Public-sector procurement policies
–Regulatory controls
–Currency controls
–Investment controls
–Local-purchase requirements
§Figure 9.3
Tariff Revenues
as a
Percentage of
Government Revenues
for Selected Countries
§Figure 9.4
§Impact of an Import Tariff on Demand for U.S.–Made Minivans
§Figure 9.5 Tariff Rate Quota on Widgets

A tariff rate quota imposes high tariff rates on imports above the threshold level

§A complex web of quotas restricts the ability of Chinese factories to sell internationally
§Exports of Canadian softwood lumber to the U.S. have resulted in a 30-year long trade dispute
§Figure 9.6 Types of Barriers to
International Trade
§Promotion of International Trade
§Foreign Trade Zones (FTZ)
§Export Financing Programs
§Map 9.2 Foreign Trade Zone on Mauritius
§Controlling Unfair Trade Practices
§International Trade Administration (ITA)
–Division of U.S. Department of Commerce
–Determines whether an unfair trade practice has occurred
–Confirmed cases transferred to U.S. International Trade Commission (ITC)
§Two types of unfair trade practices
–Government subsidies
–Unfair pricing practices
§Controlling Unfair Trade Practices
§Countervailing Duties (CVD)
§Antidumping Regulations
§Super 301
§Objectives of
Unfair Trade Practice Laws
§Promote global efficiency by encouraging production in those countries that can produce a good most efficiently
§Ensure that trade occurs on the basis of comparative advantage, not the size of government subsidies
§Protect consumers from predatory behavior
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Ditulis oleh pada 24/08/2012 in Akutansi International


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