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Barriers To International Trade

There are two main types of barriers to international trade: tariffs and quotas. Tariffs are taxes placed on imported goods, and can be either protective tariffs which make domestic goods relatively cheaper or revenue tariffs which generate tax revenue. Quotas place limits on the amount of a good that can be imported and are used to reduce supply and keep domestic prices high. Supporters of free trade argue agreements like the WTO, NAFTA, and GATT have increased trade and economic growth while critics argue they have negatively impacted domestic jobs and industries in some countries.

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Deepti Tuteja
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60 views2 pages

Barriers To International Trade

There are two main types of barriers to international trade: tariffs and quotas. Tariffs are taxes placed on imported goods, and can be either protective tariffs which make domestic goods relatively cheaper or revenue tariffs which generate tax revenue. Quotas place limits on the amount of a good that can be imported and are used to reduce supply and keep domestic prices high. Supporters of free trade argue agreements like the WTO, NAFTA, and GATT have increased trade and economic growth while critics argue they have negatively impacted domestic jobs and industries in some countries.

Uploaded by

Deepti Tuteja
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Barriers To International Trade Presentation Transcript

1. Barriers to International Trade

2. Restricting Trade Trade is restricted through the use of tariffs (taxes placed on imported goods) or quotas (limits on the amount of a good that can be allowed into a country) or a combination of both.

3. Tariffs two types Protective tariff high enough to protect lessefficient domestic industries Revenue tariff high enough to generate revenue for the government without prohibiting imports

4. TARIFFS Example: Say a pencil costs $1 to produce in the U.S., and costs 35 to produce in another country A protective tariff of 95 on imported pencils makes their cost $1.30, so the American-made pencil ($1) is cheaper.

5. TARIFFS Example: Say a pencil costs $1 to produce in the U.S., and costs 35 to produce in another country A revenue tariff of 40 on imported pencils makes their cost 75. The government gets revenue from each sale, but the more expensive American-made pencil is not protected from this competition.

6. Quotas Used to reduce the total supply of a product to keep prices high for domestic producers A quota can be set as low as zero to keep a product from entering the country at all

7. Arguments FOR protection National Defense a nation does not want to become too dependent on other nations and risk not being able to get critical supplies. Promote Infant Industries new or emerging industries need to be protected from foreign competition

8. Arguments FOR protection Protect Domestic Jobs Keep the Money at Home Help the balance of payments the difference between the money a country pays out to, and receives from, other nations

9. The Free Trade Movement World Trade Organization (WTO) Administers previous agreements under GATT (General Agreements on Tariffs and Trade 1947) GATT includes agreements on tariff reductions as well as doing away with quotas

10. The Free Trade Movement World Trade Organization (WTO) Settles disputes between governments Organizes trade negotiations Provides technical assistance and training for developing countries

11. The Free Trade Movement North American Free Trade Agreement (NAFTA) Canada, Mexico, United States Proposed by George Bushs

administration and concluded by Bill Clintons administration (1993) Reduced tariffs among the three partners

12. The Free Trade Movement NAFTA Arguments for Trade has increased dramatically among the three partners Poverty rates have fallen and real income rates have risen in Mexico Rapid growth of non-border metropolitan areas in Mexico

13. The Free Trade Movement NAFTA Controversy Net manufacturing employment has fallen in the United States Mixed public opinion US sees Mexico as the winner and is divided as to whether the US is a winner or loser in NAFTA Mexico and Canada see themselves on the losing end and see US as the winner

14. The Free Trade Movement NAFTA Controversy Freedom of mobility across the borders has raised concern about illegal immigration as well as national security Allegations of human rights abuses in Mexican maquiladoras (factories which take in imported raw materials and produce goods for export)

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