Country Focus Subsidized Wheat Production in Japan Summary This feature

Country focus subsidized wheat production in japan

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Country Focus: Subsidized Wheat Production in Japan
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Summary This feature explores the subsidies Japan continues to pay its wheat farmers. Tens of thousands of Japanese farmers continue to grow wheat despite the fact that the wheat grown in North America, Argentina, and Australia is far cheaper and of superior quality. The Japanese farmers stay in business thanks to the hefty subsidies paid by the Japanese government. As a result, wheat prices in Japan are substantially higher than they would be if a free market were allowed to operate. Teaching Tip: To extend this discussion, consider discussing Japan's role in the production of rice. For more on this, go to { ? chan=search }, and { m }. Import Quotas and Voluntary Export Restraints An import quota is a direct restriction on the quantity of some good that may be imported into a country. A tariff rate quota is a hybrid of a quota and a tariff where a lower tariff is applied to imports within the quota than to those over the quota. A voluntary export restraint is a quota on trade imposed by the exporting country, typically at the request of the importing country's government. While import quotas and voluntary export restraints benefit domestic producers by limiting import competition, they raise the prices of imported goods. The extra profit that producers make when supply is artificially limited by an import quota is referred to as a quota rent . Local Content Requirements A local content requirement demands that some specific fraction of a good be produced domestically. As with import quotas, local content requirements benefit domestic producers, but consumer face higher prices.
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Administrative Policies Administrative trade polices are bureaucratic rules that are designed to make it difficult for imports to enter a country. The effect of these polices is to hurt consumers by denying access to possibly superior foreign products. Antidumping Policies Dumping is variously defined as selling goods in a foreign market below their costs of production, or as selling goods in a foreign market at below their "fair" market value. Dumping is viewed as a method by which firms unload excess production in foreign markets. Alternatively, some dumping may be the result of predatory behavior, with producers using substantial profits from their home markets to subsidize prices in a foreign market with a view to driving indigenous competitors out of that market. Once this has been achieved the predatory firm can raise prices and earn substantial profits. Antidumping polices (also known as countervailing duties) are policies designed to punish foreign firms that engage in dumping. The ultimate objective is to protect domestic producers from "unfair" foreign competition.
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