Trade barrier

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Trade barrier

  1. 1. Global Market Place
  2. 2. Composition & Patterns of World Trade
  3. 3. WTO Statistics  World merchandise trade and trade in commercial services by region and selected economy, 2008  Shares of regional trade flows in world merchandise exports, 2008  Leading exporters and importers in world merchandise trade, 2008  World merchandise imports by region and selected economy, 1948, 1953, 1963, 1973, 1983, 1993, 2003 and 2008  World merchandise exports by region and selected economy, 1948, 1953, 1963, 1973, 1983, 1993, 2003 and 2008
  4. 4. WTO Country Profile  India  China  Japan  United States
  5. 5. Geo Business Model
  6. 6. Geo-Business Model There are 3 main interacting forces that affect the firm’s international decisions.
  7. 7. Conditioning Variables Product Specific Variable – that confer competitive advantages for the foreign investor •R & D •Product Differentiation •Product processing •Management Skills •Know-how • Economies of scale
  8. 8. Conditioning Variables Country Specific features – that helps to sustain competitive advantages of the firms • Economic Size of the market • Nature of domestic competition • Resource scarcity • Surplus
  9. 9. Conditioning Variables Inter-nation variables – that relate to trade/financing across borders • International Finance • Tariffs • Strategic Alliances
  10. 10. Motivational variables Measures that motivate towards building Competitive Strategy • Market Seeking – Horizontal/forward integration • Resource-seeking - vertical/backward integration • Production efficiency- lower resource cost • Technology-seeking-access to foreign technology or skilled labor • Risk Avoidance- minimizing quantum or probability of losses
  11. 11. Control variables That comprise administrative actions-policies of home and host governments that directly or indirectly influence international business through +ive incentives and/or –ive controls.
  12. 12. Influence on Variables The organisation perceives the conditioning variables(opportunities for competitive advantage), respond appropriately(motivation variable-competitive strategy) but has no influence over the control variables.
  13. 13. It describes any government policy or regulation that restricts international trade. A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade (tariffs and non-tariff barriers) are reduced or eliminated among the participating states. Trade Barrier
  14. 14. Types of Trade barriers  Import duties  Import quotas  Import licenses  Tariffs  Export licenses  Subsidies  Voluntary Export Restraints  Mercantilism
  15. 15. Impact of Trade Barriers Direct Effects • Decline in Consumption • Increased Domestic Production • Decline in Imports • Tariff Revenue
  16. 16. Indirect Effect • Inflation • Special interests’ privileges • Government control and political considerations in economic matters • Balance-of-payments positions • Supply-and-demand patterns • International relations (~trade wars) Impact of Trade Barriers
  17. 17. Other Impacts: • Manufacturer’ supply sources • Choices available to consumers • Competition • Impact On Income Distribution Impact of Trade Barriers
  18. 18. Monetary Barriers • Blocked currency • Differential exchange rates • Government approvals
  19. 19. Why Protection? Countries use protectionist measures to shield a country’s markets from intrusion by foreign competition and imports. Protectionism contributes to industrial inefficiency and makes a nation uncompetitive. Protectionism is implemented through the imposition of trade barriers, which include tariff barriers and non- tariff barriers.
  20. 20. Case for Protection  Military Self-Sufficiency  Increase Domestic Employment  Diversification-For-Stability  Infant-Industry Argument  Strategic Trade Policy  Protection-Against-Dumping
  21. 21.  Increase of business size  Retaliation and bargaining  Need to keep money at home  Encouragement of capital accumulation  Maintenance of standard of living and real wages  Conservation of natural resources  Industrialization of a low-wage nation Case for Protection
  22. 22. Trade Liberalisation Trade liberalization refers to the removal of government incentives and restrictions from trade between nations. Trade liberalisation driven by macroeconomic policies and economic reforms, including Structural Adjustment programmes. What are + and – of TL?
  23. 23. Thank You

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