Chapter 9 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall Chapter 9 - 1 Formulation of National Trade Policies
MBA 713 - Chapter 09
Sep 14, 2014
MBA 713 - Chapter 09
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Chapter 9 - 1
Chapter 9
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Formulation of National Trade
Policies
Chapter 9 - 2
Learning Objectives
• Review pros and cons of governmental intervention in international trade
• Identify advantages and disadvantages of adopting an industrial policy
• Analyze how domestic politics affect a country’s international trade policies
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 9 - 3
Learning Objectives
• Describe the major tools countries use to restrict trade
• Specify the techniques countries use to promote international trade
• Explain how countries defend against unfair trade practices
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 9 - 4
Rationale for Trade Intervention
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Chapter 9 - 5
Trade Policy Debate
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Free Trade
Fair Trade
Chapter 9 - 6
Industry Arguments
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National Defense
Infant Industries
Strategic TradeTheories
Maintenanceof Jobs
Chapter 9 - 7Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
National Defense
•Raw Materials•Machinery•Technology
Chapter 9 - 8Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Government ProtectionComparativ
e Advantage
Infant Industries
Chapter 9 - 9
Maintenance of Jobs
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Existing Levels of Employment
Relief from Competition
Chapter 9 - 10
Strategic Trade Theory
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Oligopolistic Industries
Government Intervention
Requests for Protection
Chapter 9 - 11
Payoff Matrix: Profits from Developing a Nuclear Power Plant
Design (in billions of USD)
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Arev
a
Develop
Do NotDevelop
Develop Do Not DevelopToshiba
-1
-1 10
0
10
0
0
0
Chapter 9 - 12
Payoff Matrix: Profits Resulting from a $2 Billion Subsidy to Areva
(in billions of USD)
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Arev
a
Develop
Do NotDevelop
Develop Do Not DevelopToshiba
-1
-1 + 2 = +1 10 + 2 = 12
0
10
0
0
0
Chapter 9 - 13
Summary of Discussion
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Chapter 9 - 14
Advantages and Disadvantages of
Adopting an Industrial Policy
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Chapter 9 - 15Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Economic Development
•Export Strategy•Import Strategy
Chapter 9 - 16
Industrial Policy
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Opportunities Challenges
Key Industries
Competitiveness
Politicians
Special Interests
Chapter 9 - 17Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Public Choice Analysis
•Interest Groups•Elected Officials
Chapter 9 - 18
Summary of Discussion
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Chapter 9 - 19
Barriers to International Trade
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Chapter 9 - 20
Tariff Barriers
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•Export Tariffs
•Transit Tariffs
•Import Tariffs
Chapter 9 - 21Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Three Import TariffsHeading/Subheading
Stat.Suffix Article Description
Units of Quantity Rates of Duty
2006.00 Fruit, nuts, fruit peel, other plant parts, preserved by sugar
2006.00.20 00 Cherries Kg 9.9¢/kg + 6.4%
2006.00.30 00 Ginger Root Kg 2.4%
2006.00.40 00 Pineapples Kg 2.1%
Other, including mixtures:
2006.00.50 00 Mixtures Kg 16%
2006.00.60 00 Citrus Fruit; Peel of citrus or other fruit kg 6¢/kg
2006.00.70 00 Other Fruit and Nuts Kg 8%
2006.00.90 00 Other kg 16%
Chapter 9 - 22
Impact of an Import Tariff on Demand for U.S. Made SUVs
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Gainers: Producers, suppliers, labor, dealers & communities associated with U.S. SUVs
Losers: Domestic consumers, workers, producers & dealers associated with Foreign SUVs
Chapter 9 - 23
Nontariff Barriers
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Numerical Quotas
Numerical Export Controls
Other Nontariff Barriers
Chapter 9 - 24
Numerical Quotas
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Tariff
rate
on
wid
gets
Number of widgets100,000
Imports above thresholdQuota threshold
0
TL
TH
Chapter 9 - 25
Numerical Export Controls
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Quantitative Trade Barriers
Voluntary Export Restraint
Embargos and Bans
Chapter 9 - 26
• Product and Testing Standards
• Restricted Distribution-Network Access
• Public-Sector Procurement Policies
• Local-Purchase Requirements
• Regulatory and Currency Controls
• Investment Controls
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Other Nontariff Barriers
Chapter 9 - 27
Summary of Discussion
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Chapter 9 - 28
Promotion of International Trade
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Chapter 9 - 29
Government Subsidies
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Opportunities Challenges
Export Markets
Foreign Imports
Trade Patterns
Efficient Producers
Chapter 9 - 30
Foreign Trade Zones
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Preferential Tariff Treatment
Economic Development
Customs Duties
Chapter 9 - 31
Export Financing Programs
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Government-Owned Agencies
Export-Import Bank of the U.S.
Overseas Private Investment Corp.
Chapter 9 - 32
Summary of Discussion
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Chapter 9 - 33
Controlling Unfair Trade Practices
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Chapter 9 - 34
Unfair Trade Practices
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International Trade
Administration(ITA)
International Trade
Commission(ITC)
Chapter 9 - 35
Countervailing Duty
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ForeignSubsidy
Ad ValoremTariff
Chapter 9 - 36
Antidumping Laws
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•Price Discrimination•Predatory Pricing
Chapter 9 - 37
Unfair Trade Laws
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Opposition to Enforcement
Protectionist Trade Barriers
Harm to Consumers
Chapter 9 - 38Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Sudden Import Surges
Safeguards
Chapter 9 - 39
Summary of Discussion
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Chapter 9 - 40
Chapter 9
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Formulation of National Trade
Policies
Chapter 9 - 41Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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