ECN_203__18_Trade Policy(f09)

ECN_203__18_Trade Policy(f09) - imported goods may it...

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Chapter 18: Trade Policy For many countries, international trade is a large source of income. There are several different types of government policies to improve a country’s trade position over other nations. As a result, certain policies may cause retaliation.
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Competitive Edge on Production Costs Nations have different regulations for production-- the less restrictive creates advantages by lowering production costs and thus the prices of their goods. Examples are child labor restrictions, worker safety rules, environmental laws.
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Competitive Edge on Customer Satisfaction Creates products more to the satisfaction of consumers. Not necessarily a trade policy, but creates an advantage. E.g. Foreign car manufacturers in the 70s & 80s had a competitive edge (Also facilitated by a strong dollar).
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Red Tape and Regulations Red tape and regulations on
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Unformatted text preview: imported goods may it difficult for other nations to sell in other countries. Commonly used for car and food trades. May cause retaliation. Exchange Rate Manipulation Policy to weaken currency and stimulate export spending-- two approaches: 1. Sterilization-- sell domestic currency to buy foreign currency. 2. Change interest rates to affect international capital flows. While stimulates export spending, will also have some adverse effects. Quotas A limit set on the number of foreign imports. In 1980s, U.S. placed quotas on Japanese cars. Other countries may retaliate with their own quotas. Tariffs Tariffs are in effect a tax on imported goods. Tariffs cause the price of imports to rise and less to be bought. Retaliation is common and may lead to a tariff war....
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ECN_203__18_Trade Policy(f09) - imported goods may it...

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