文档介绍：International Business
Lecture 4
Political Economy of International Trade
Instruments of Trade Policy: Tariffs
Tariffs are the oldest form of trade policy; they fall into two categories
Specific tariffs are levied as a fixed charge for each unit
Ad valorem tariffs are levied as a proportion of the value of the imported good
Tariffs are good for government because they generate revenue
Tariffs protect domestic producers but they reduce efficiency
Tariffs are bad for consumers because they increase the cost of goods
Instruments of Trade Policy: Subsidies
Government payment to a domestic producer
Cash grants
Low-interest loans
Tax breaks
Government equity participation in pany
Subsidy revenues are generated from taxes
Subsidies encourage over-production, inefficiency and reduced trade
Instruments of Trade Policy: Quotas
Import quota
Restriction on the quantity of some good imported into a country
Voluntary export restraint (VER)
Quota on trade imposed by exporting country, typically at the request of the importing country
Hypothetical Tariff Rate Quote
Instruments of Trade Policy: Local Content
Requires some specific fraction of a good to be produced domestically
Percent ponent parts
Percent of the value of the good
Initially used by developing countries to help shift from assembly to production of goods.
Developed countries (US) beginning to implement
“Buy America Act”– 51% of the materials by value produced domestically.
ponent parts manufacturer, LCR acts the same as an import quota
Benefits producers, not consumers
Instruments of Trade Policy: Administrative Policies
Bureaucratic rules designed to make it difficult for imports to enter a country
France – video tapes (arriving through a small customs entry point)
Japanese ‘masters’ in imposing rules
Tulip bulbs (to be cut vertically down the middle for checking)
Federal Express (large proportion to be opened for checking pornography)
Instruments of Trade Policy: Antidumping Policies
Defined as
Selling