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Trade (Trade Restrictions (Dumping: selling a product abroad for a less…
Trade
Trade Restrictions
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Protect infant (or dying) industry: without the protection the firm will not be able to survive because lower-cost imports will under price it in its local market
National defense: certain industries need protection from imports because they are vital to security and must be kept operating
Protect domestic jobs from cheap foreign labor: foreign exporters can enter the home country market with low-priced goods and eliminate jobs of home country workers
Scientific tariff or fair competition: this will bring the cost of imported goods up to the cost of domestic products and this will eliminate the unfair advantage that a foreign competitor have because of superior technology and lower labor costs
Retaliation: and industry whose exports have restriction placed on them by another country may ask their government ti retaliate with similar restrictions
Dumping: selling a product abroad for a less than the cost of production, the price in the home market, or the price to third countries. e.g. Chinese products
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Social dumping: unfair competition caused by firms usually from developing nations with lower labor costs and poorer working conditions
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Subsidies: financial contributions provided by the government directly or indirectly to a domestic firm either to encourage exports or to help protect it from imports
e.g. cash payments or preferential tax treatment
:check: Competitors in importing nations ask their government to impose "countervailing duties": Additional import taxes levied on imports that are benefited from export subsidies
Tariffs barriers
Official prices: are included in the customs tariff of same nations. It guarantees that certain minimum import duty will be paid irrespective of the actual invoice price
Variable levy: an import duty set as the difference between world market prices and local government supported prices
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Lower duty for more local inputs: import duties set by many nations in such a way that they encourage local input
Non-Tariff Barriers
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Orderly marketing arrangements: formal arrangements between exporting and importing countries that stipulate the import or export quotes each nation will have for a good
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Non-quantitative, Non-tariff Barriers:
a. Direct government participation in trade: through subsidy
b. Customs and other administrative procedures
c. Standards: to protect health and safety of a nation's citizens
Types
Trade in international business: means importing and exporting or money goes out and in the country (hard currency
Trade in domestic business: means buying and selling inside the country or the movement of money inside the country (local currency) from organization to another organization or from the government to private and vice-versa