The Impact of Trade polcies Flashcards
What are some examples of trade barriers besides tariffs?
Some examples of trade barriers besides tariffs include import quotas, voluntary export restraints, and antidumping actions. These are known as nontariff barriers to trade.
What happened to the importance of nontariff barriers as tariffs were reduced?
As tariffs were negotiated down during the postwar period, the importance of nontariff barriers significantly increased. This shift in focus towards nontariff barriers reflects the continued presence of trade restrictions despite reductions in tariffs.
What is an import quota?
An import quota is a nontariff trade barrier that involves a direct quantitative restriction on the amount of a commodity that is allowed to be imported.
What is the significance of import quotas as a nontariff trade barrier?
Import quotas are considered the most important nontariff trade barrier. They restrict the quantity of imports allowed into a country, limiting competition from foreign producers and protecting domestic industries.
What are some reasons for implementing import quotas?
Import quotas can be used for various purposes, including protecting domestic industries, protecting domestic agriculture, and addressing balance-of-payments concerns.
How have industrial nations and developing nations used import quotas?
Industrial nations have utilized import quotas to protect their agriculture sector, while developing nations have employed them to promote import substitution of manufactured products and to address balance-of-payments issues.
What are some examples of nontariff barriers to trade other than import tariffs and quotas?
Some examples of nontariff barriers to trade include voluntary export restraints, technical regulations, administrative regulations, international cartels, dumping, and export subsidies
What is the term used to describe the increased importance of nontariff trade barriers?
The term used to describe the increased importance of nontariff trade barriers is the “new protectionism.”
What impact have nontariff trade barriers had on the world trading system?
Nontariff trade barriers, also known as the new protectionism, have become more significant than tariffs in obstructing the flow of international trade. They represent a major threat to the world trading system by creating additional hurdles and challenges for global commerce.
What are voluntary export restraints (VERS)?
Voluntary export restraints refer to situations where an importing country persuades another nation to limit its exports of a specific commodity voluntarily, often under the threat of stricter trade restrictions.
Why did industrial nations, including the United States, employ voluntary export restraints?
Industrial nations, such as the United States, used voluntary export restraints to maintain the appearance of supporting free trade while still imposing limitations on imports.
What are the economic effects of voluntary export restraints?
Voluntary export restraints have similar economic effects to import quotas, except that they are administered by the exporting country. The revenue effects or rents are captured by foreign exporters instead of the importing country.
How effective were voluntary export restraints compared to import quotas?
Voluntary export restraints were generally less effective than import quotas. They created opportunities for other nations to replace part of the exports of major suppliers through third countries.
What is dumping in the context of international trade?
Dumping refers to the practice of exporting a commodity at a price lower than its cost of production or selling it at a lower price in foreign markets compared to the domestic market.
What is persistent dumping?
Persistent dumping, also known as international price discrimination, occurs when a domestic monopolist consistently sells a commodity at a higher price in the domestic market compared to international markets in order to compete with foreign producers.
