AEM2300 Lecture10 Spring 2009

AEM2300 Lecture10 Spring 2009 - Lecture 10 Non-tariff Trade...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
1 of Lecture 10 Professor David Lee AEM-ECON 2300 Non-tariff Trade Barriers (NTB's) Import quotas Voluntary export restraints (VER's) Export embargoes and controls Dumping Export subsidies and taxes Import subsidies Technical barriers to trade Sanitary and phyto-sanitary restrictions
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 of Lecture 10 Professor David Lee AEM-ECON 2300 Non-tariff Trade Barriers (NTB's) Import quotas Voluntary export restraints (VER's) Export embargoes and controls Dumping Export subsidies and taxes Import subsidies Technical barriers to trade Sanitary and phyto-sanitary restrictions
Background image of page 2
3 of Lecture 10 Professor David Lee AEM-ECON 2300 Voluntary Export Restraints VER: An agreement between an exporter and an importer in which the exporter "voluntarily" agrees to limit exports (typically with the implied threat of trade retaliation if this is not done). Examples: Exports of Japanese automobiles to the U.S. in 1981-1985 (1.85 million units), and afterward unilaterally on the part of Japan from 1985-1991 (2.3 million units) Ave. cost of a Japanese import increased by $1,300 in 1984 Saved 22,000 U.S. jobs (but at a cost of $180,000 per job saved!)
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 of Lecture 10 Professor David Lee AEM-ECON 2300 Voluntary Export Restraints Exports of computer chips from Japan to the U.S. (after 1989) Exports of automobiles from Japan to Europe limited to 16% of market (1991-1999) Exports of toys from China to Europe (1994-2000 )
Background image of page 4
5 of Lecture 10 Professor David Lee AEM-ECON 2300 Voluntary Export Restraints Exports of computer chips from Japan to the U.S. (after 1989) Exports of automobiles from Japan to Europe limited to 16% of market (1991-1999) Exports of toys from China to Europe (1994-2000 ) Main social welfare effect is to enable exporting country , rather than the importing country, to capture “quota rents” created by the supply limitation
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 of Lecture 10 Professor David Lee AEM-ECON 2300 Q S ROW ES ROW S A ROW (Exporter) P A Q S Q* T Q T P* P ROW D ROW P’ ROW P A P I Q D A ED A (Importer) Export controls and VER’s
Background image of page 6
7 of Lecture 10 Professor David Lee AEM-ECON 2300 Q S ROW ES ROW S A ROW (Exporter) P A Q S Q* T Q T P* P ROW P’ ROW D ROW P A P I Q D A ED A (Importer) Comparing import quotas and VER’s a b c d c e g h Free trade, import quotas and VER’s (compared to autarky): importer exporter Free trade Import quota VER c + (b+d) +g e + f + h c + e + g h g c + e + h
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 of Lecture 10 Professor David Lee AEM-ECON 2300 Effects of eliminating nontariff trade barriers Source: US International Trade Commission, The Economic Effects of Significant US Import Restraints, Phase 1: Manufacturing . Washington, D.C.: Government Printing Office, October 1989, tables ES-3 and ES-4 Economic effects of NTB elimination category consumer gain produce loss worker income loss job loss (thousands) steel VERs 820.6 268.7 18.4 3.8 specialty steel quotas 34.1 9.9 0.7 0.1 machine tool VERs 48 11.3 1.9 0.4 textile quotas under the MFA 883.1 303.6 86.8 6.3 millions of dollars
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 38

AEM2300 Lecture10 Spring 2009 - Lecture 10 Non-tariff Trade...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online