March 12 - M arch 12, 2009 Non-tariff bar riers to t rade:...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
March 12, 2009 Non-tariff barriers to trade: Export subsidy: direct payments or the granting of tax relief and subsidized loans to a nations exporters or there potential exporters or providing low interest loans to foreign buyers of their good. Form of dumping, making your product artificially cheap for foreign buyers. Note: they are illegal by international agreement, however, most of the industrialized nations do it anyhow. Arguments: 1. They need to establish these barriers to import in order to protect their domestic labor force from cheap foreign labor. a. Whether or not foreign labor is cheaper than domestic wage depends on wage relative to productivity. If you still find that foreign labor is cheaper, then increase productivity of labor. Doesn’t hold much economic merit. 2. “Scientific tariff” = impose tariff on imported goods so as to make price imported goods equal to domestic price. Domestic firms can compete. If you do this, theres not comparative advantage, no basis for trade. Doesn’t hold merit. 3. They need the protection in order to reduce their domestic unemployment. Argument for protectionism 1. Notion to reduce domestic employment, erect barriers, keep out foreign goods, produce domestic goods, reducing unemployment, so you have exported
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/08/2011 for the course ECONOMICS 101 taught by Professor June during the Spring '08 term at Rutgers.

Page1 / 3

March 12 - M arch 12, 2009 Non-tariff bar riers to t rade:...

This preview shows document pages 1 - 2. Sign up to view the full document.

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