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Chapter 6 Student P10

Chapter 6 Student P10 - Chapter 6 The Political Economy of...

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Chapter 6 The Political Economy of International Trade
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Key Concepts Forms of government intervention The role of the World Trade Organization Accomplishments of the Uruguay Round Goals and challenges in the Doha Round
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Instruments of Trade Policy Tariffs Subsidies Import Quotas Voluntary Export Restraints Local Content Requirements Administrative Trade Policies Antidumping Policies
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Tariffs Specific tariffs are levied as a fixed charge for each unit. Ad valorem tariffs are levied as a proportion of the value of the imported good. Export tariffs are taxes placed on a good that is exported from a country.
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Subsidies Government payments to domestic producers that lower production costs. Cash grants, low-interest loans, tax breaks, or government equity participation
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Import Quotas Restriction on the quantity of a good to be imported into a country. Can be enacted by issuing import licenses to a limited number of firms. With a tariff rate quota, a lower tariff rate is applied to imports within the quota than those above the quota.
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Voluntary Export Restraints Quota on trade imposed by exporting country, typically at the request of the importing country. Countries agree to voluntary export restraints to avoid other trade actions.
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Local Content Requirements Requires some specific fraction of a good to be produced domestically. Requirement can pertain to a minimum percent of component parts or a percent of the value of the good.
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