9. Effects of a subsidy
• Mostly subsidies protect the inefficient and promote
excess production
• Ex: Agriculture subsidies:
a. Allow inefficient farmers to stay in business
b. Encourage countries to overproduce
c. Encourage countries to produce products that can be
produced more cheaply elsewhere and imported
d. Reduce international trade in agricultural products
10.
11. A trade policy is a government policy that
affects the number of goods and services a
country exports and imports.
Free trade is when there are no
government restrictions on trade.
Protectionism is when governments set
trade restrictions to help domestic
industries.
INTRODUCTION
In an economy, there is a spectrum of trade
policies. On one end there is free trade and
on the other end, there is protectionism.
Under a free trade policy, there is no or very
little government intervention in a country’s
trading practices. Under protectionism, the
government regulates the trade flowing in
and out of a country to protect domestic
industries and limit its reliance on other
countries. Most countries are not one or the
other but are located somewhere on this
spectrum.
12. Trade policy sets requirements, priorities,
guidelines, and regulations for part of the
world-to-country exchange. Such measures
are country-specific and developed by their
leaders, and A country’s international strategy
requires import and export duties,
enforcement rules, tariffs, and quotas.
13. TRADE POLICY
CONSTITUENTS
A FOREIGN STRATEGY
USUALLY RELIES ON THE
FOLLOWING GLOBAL TRADE
PARAMETERS,
-TARIFFS
-TRADE BARRIERS
-SAFETY
-FORMS OF TRADE
POLICIES
-NATIONAL FOREIGN
POLICY
-BILATERAL TRADE POLICY
-INTERNATIONAL TRADE
POLICY
-SIGNIFICANT TYPES OF
TRADE POLICIES
14. POLICY ON LIBERALIZATION
THE PRIMARY CONCERNS OF
INTERNATIONAL TRADE
LIBERALIZATION ARE,
- Expanded domestic employment
- Diversification for stability
- Security from dumping
- Inexpensive foreign labor-
power
15. Indicators of foreign strategy
1. The overall tariff point
It is defined as the average rate of
import duty depending on the number
of manufactured products on which
the price relates. This metric is
specified only for commodities levied
by duties
2. The average amount of non-tariff
barriers
It is measured as the volume of
imports or exports subjected to
prohibitions.
The mode of constraints added to
each indicator is called accessible if its
degree is less than 10%, mild if less
than 10-15%, restricted if over 25%,
and restrictive if 40-100%.
Protectionism policy
Protectionism policy leads to the
country’s growth of some sectors and
is also a required factor for agrarian
industrialization and reduction of
unemployment. However, eliminating
external rivalry decreases domestic
producers ‘ confidence in making
science and technical advances,
increasing output performance.
There are certain types of
protectionism:
- Targeted protectionism, aimed
towards some countries or
commodities.
- Consumer protectionism, which
defends some industries.
- Mutual protectionism: countries that
belong to international integration
agreements extend this type to
countries that do not support unions.
16.
17. Protecting sunrise industries
- Trade barriers can be used to protect sunrise industries, also regarded as baby industries, like those
including new technologies. It allows new companies to create, expand, and become competitive in the
world.
- Private industry security can grow a comparative advantage. Domestic companies, insulated from
rivalry, may grow and gain from increased efficiency. As businesses expand, they will invest in financial
and human resources and build new skills. If these skills and technologies are established, trade
security requires fewer, and barriers will gradually be eliminated.
- At another end of the spectrum are retirement industries, also known as dying sectors, which will
require some assistance to enable them to gradually decline and escape any of the adverse consequences
of such decline. For the UK, each century had its decreasing industries, such as shipbuilding in the
1950s, automobile manufacture in the 1970s, and steel processing in the 1990s.
- Even walls may be installed to defend critical assets, including oil, water, steel, armaments, and food.
The implied goal of the EU Shared Agricultural Policy is to establish European food protection by
preserving its agricultural sector.
20. Protecting non-renewable commodities
Non-renewable resources, like oil, are called a particular situation where
standard free-trade laws are sometimes rejected. For countries looking to
depend on long-term oil exports, like the oil-rich Arab nations, reducing
short-term performance by production levels is one tool used to preserve
energy. Any country’s cultural, social, and political claims defend
protectionist interests.
In most industrialized countries, where a competitive market system
prevails, multinational economic organizations endorse free trade
strategies, whereas emerging nations favor partly protected trading
activities from defending their local economies. Today’s globalization
period relies on sound trade policies that incorporate technological trends,
create open and equitable trading standardstrade policy, and increase
prospects for growing foreign trade
