pptdesign.blogbus.comTradeandbarrierSusanFreeTradeandprotectionismThenutsandboltscomeapartInternationaltrade•InternationaltradedevelopfastsinceworldwarII.SodidVerticalspecialization.•Verticalspecializationoccurswhenacountryusesimportedintermediatepartstocreateagooditlaterexports—thatis,thecountrylinkssequentiallywithothercountriestoproduceafinalgood.•verticalspecializationhasaccountedforalargeandincreasingshareofinternationaltradeoverthelastseveraldecades.•Theyalsonotethatbecausethetrendsencouragingverticalspecialization—lowertradebarriersandimprovementsintransportationandcommunicationstechnologies—arelikelytocontinue,thistypeofinternationaltradeshouldbecomeevenmoreprevalentinthenextcentury.•Butsincetradeprotectionismgrows,thenutsandboltscomeapart.pptdesign.blogbus.comContentsClassificationoftradeprotectionismFormsofnon-tariffbarrierFormsofnewtradeprotectionismWhatcanwedotodealwithit?Tradebarrier•Tradebarriersaregovernment-inducedrestrictionsoninternationaltrade.•1.Fromtheformoftradebarrier,itcanbedividedastariffandnon-tariffbarrier.•2.Fromthetimeorder,tradebarriercanbedividedinto:traditionaltradebarrierandNTP(Newtradeprotectionism)Non-tariffbarrier•Importlicenses•Exportlicenses•quotas•Subsidies•VoluntaryExportRestraints•Localcontentrequirements•Embargo•Devaluationofcurrency(1)Animportlicenseisadocumentissuedbyanationalgovernmentauthorizingtheimportationofcertaingoodsintoitsterritory.Itisawaytodiscriminateagainstanothercountry'sgoodsinordertoprotectadomesticindustryfromforeigncompetition.(2)Anexportlicensegrantspermissiontoconductacertaintypeofexporttransaction(3)Animportquotaisatypeofprotectionisttraderestrictionthatsetsaphysicallimitonthequantityofagoodthatcanbeimportedintoacountryinagivenperiodoftime.1Quotas,likeothertraderestrictions,areusedtobenefittheproducersofagoodinadomesticeconomyattheexpenseofallconsumersofthegoodinthateconomy•Asubsidyisanassistancepaidtoabusinessoreconomicsector.Mostsubsidiesaremadebythegovernmenttoproducersordistributedassubventionsinanindustrytopreventthedeclineofthatindustryoranincreaseinthepricesofitsproductsorsimplytoencourageittohiremorelabor.•Avoluntaryexportrestraint(VER)orvoluntaryexportrestrictionisagovernmentimposedlimitonthequantityofgoodsthatcanbeexportedoutofacountryduringaspecifiedperiodoftime.•TypicallyVERsarisewhentheimport-competingindustriesseekprotectionfromasurgeofimportsfromparticularexportingcountries.VERsarethenofferedbytheexportertoappeasetheimportingcountryandtodetertheotherpartyfromimposingevenmoreexplicit(andlessflexible)tradebarriersLocalContentRequirements•Theproductyouproducemustcontainthelocalcontent.•February092004•NewLocalContentRequirementsOnNovember,25,2003theMinistryofPetroleumissuedOrder127/03,whichsetsoutrequirementsontheprocurementofgoodsandhiringofservicesbyoilcompaniesoperatinginAngola.Althoughthesecompanieswerealreadysubjecttocertainrestrictionsunderthetermsoftheiragreements,theMinistryofPetroleumseemscommittedtotighteningupthehiringofforeigncontractorsbytheoilindustry.embargo•Anembargoisthepartialorcompleteprohibitionofcommerceandtradewithaparticularcountry,inordertoisolateit.Embargoesareconsideredstrongdiplomaticmeasuresimposedinaneffort,bytheimposingcountry,toelicitagivennational-interestresultfromthecountryonwhichitisimposed.•In1950s,whenthePRCwasfounded,itgottheembargofromthewesterncountries.Newtradeprotectionism•Newtradeprotectionismisderivedfromthetraditionaltradeprotectionism(tariffquotaandlicensingetc.)Astheworldpreferafreetradeenvironment,thetraditionalprotectionismarenotaspowerfulastheyusedtobe.•Since1970s,westerncountrieshavecomeupwithvarioustradeprotectiontheoriesandcorrespondingpolicieswhichareregardedasNewtradeprotectionism.Ittakesnon-tariffbarrierssuchasanti-dumping,anti-subsidiessafeguard,greenbarriersandIPR(intellectualpropertyprotection),protectingdomestictradeandemployment)Formsofnewtradeprotectionism•Anti-dumping•Anti-subsidy•Greentradebarriers•Technicaltradebarriers•intellectualpropertybarriers.Anti-dumping•Anti-dumpingisatoolforprotectingdomesticindustriesfromsurgesofcheapforeignimports.AlthoughtheWTOstrivestoeliminatealltradebarriers,itrecognizesthatnationsrequireflexibilitytoadjusttoeconomicshocksasmultilateralagreementsincreasinglyliberalizetrade.Thus,thesemeasuresallownationstotemporarilyprotecttheireconomiesagainstfluctuationsintradingpatterns•Antidumpingdutieshavebecomethemostfrequentlyusedinstrumentoftradeprotection.Antidumpingprotectioncanbe“abused”toshelteruncompetitivedomesticindustriesfrommoreefficientratherthan“unfair”foreignimporters.Thiscolumnshowsthatantidumpingdutiesprotectinefficientdomesticfirmsandimpedeefficiencygains•Source:GlobalAntidumpingDatabase.•Figure1.Newly-InitiatedTradeRemedyInvestigations,1Q2007-4Q2009•AsFigure1illustrates,developingcountriesinitiated76.9%ofthesenewinvestigationscomparedto23.1%initiatedbydevelopedeconomies.Chinacontinuedtobetheexportingcountrymostfrequentlytargetedbynewinvestigations,asitwasnamedin71.4%(15ofthe21)oftheinvestigationsunderlawsthatrequiretheinvestigating