Download 2.02 Trade Barriers - robertbove

2.02 Exemplify how
and why nations
develop trade barriers
and support export
activities
http://www.cbsnews.com/video/watch/?id=10289244n
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.
• http://www.dailymotion.com/video/xfxlcn_french-farmers-raisestink-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.
http://hts.usitc.gov/ - 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…

http://www.youtube.com/watch?v=Bhz9t6KTFQ
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
 http://www.cbp.gov/xp/cgov/trade/trad
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
http://www.pmddtc.state.gov/embargoed_countr
ies/index.html Embargo activity…
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
http://www.ethicalconsumer.org/LinkClick.aspx?fil
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
http://www.usitc.gov/trade_remedy/731_ad_701_
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.
http://www.export.gov/tradeevents/index.asp
Consulates are government appointed officials from one
country that reside in another country to represent interests of
appointing country’s citizens. http://www.usembassy.gov/
http://www.state.gov/s/cpr/rls/fco/
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)
http://www.buyusa.gov/
 Home page of US Commercial Service, part of
Dept. of Commerce

http://www.youtube.com/watch?v=JO7SHg25g
po&feature=relmfu
 US Commercial Service – federal export
support video

In Conclusion:
http://www.youtube.com/watch?v=RQj
obBwvcUU
 5 minute clip on Customs Border
Protection trade overview
