International Economics Study Set 9

Business

Quiz 8 :

Nontariff Barriers to Imports

Quiz 8 :

Nontariff Barriers to Imports

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What are voluntary export restraint (VER) agreements Why do some governments force foreign exporters into them instead of just using quotas or tariffs to restrict imports by the same amounts Is it because VERs bring the importing country a bigger national gain than quotas or tariffs
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A non-tariff barrier to imports is a policy used to reduce the level of import than the normal tariff on imports. There are many forms of non-tariff barriers such as import quotas, discriminatory product standards and administrative red tape to harass importers of foreign products. Non-tariff barrier can reduce the level of imports by limiting the quantity of imports, increasing the cost of getting imports in to the market. Non-tariff barrier creates uncertainty about the conditions under which will be permitted.
A voluntary export restraint is the different trade barrier. In this trade restriction, the importing country government forces the foreign exporting country to agree voluntarily restriction of the level of export to that country. This export restriction requires to cartel the level of export, restricting the sales and rising price.
The most of the governments have imposed VER to protect their industries which have faced problem to compete against the foreign cheap goods. VER can be used to avoid the embarrassment of importing quotas or rising their own tariffs because by importing quotas and tariffs would violate their commitment to the international rules imposed by the WTO.
VERs brings the importing country a bigger national gain than quotas or tariffs. Because by imposing VER, the importing country has faced the less amount of the lost than normal tariff, because of imposing VER, the foreign exporters charge higher price, that would reduce the level of the exported product in the importing country.

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Define each of the following import policies, and describe its likely effects on the well-being of the importing country as a whole: (a) product standards and (b) domes­tic content requirements.
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A non-tariff barrier to imports is a policy used to reduce the level of import than the normal tariff on imports. There are many forms of non-tariff barriers such as import quotas, discriminatory product standards and administrative red tape to harass importers of foreign products. Non-tariff barrier can reduce the level of imports by limiting the quantity of imports, increasing the cost of getting imports in to the market. Non-tariff barrier creates uncertainty about the conditions under which will be permitted.
Product standards help to reduce the discrimination against imports. Sometimes government wants to protect local producers and provides some rules that can be met more easily by local products than by imported products. The product standards are prepared to fit local products but to require modifications to foreign products. The product standards can be higher for imported products which enforced more strictly. Product standards usually cannot raise tariff or tax revenues for the importing country. The product standards can be cause of the total welfare.
A domestic content requirement means a product produced and sold in a country which has a specific minimum amount of domestic production value. Domestic content requirement user is trade protection method. It can create a barrier to import of the products that cannot meet the content rules. Sometimes they can limit the import of raw materials that they can use the domestic products.

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The United States is considering adopting a regulation that foreign apples can be imported only if they are grown and harvested using the same techniques that are used in the United States. These methods are used in the United States to meet various government standards about worker safety and product quality. a. As a representative of the U.S. government, you are asked to defend the new import regulation before the WTO. What will you say b. As a representative of foreign apple growers, you are asked to present the case that this regulation is an unfair restriction on trade. What will you say
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A non-tariff barrier to imports is a policy used to reduce the level of import than the normal tariff on imports. There are many forms of non-tariff barriers such as import quotas, discriminatory product standards and administrative red tape to harass importers of foreign products. Non-tariff barrier can reduce the level of imports by limiting the quantity of imports, increasing the cost of getting imports in to the market. Non-tariff barrier creates uncertainty about the conditions under which will be permitted.
The country US proposes that if any foreign apple exporting country exports apple to the country US market, the country has to use same harvest and techniques which are used by the country US.
(a)
To support the proposal of country US government, the representative would defend the new import regulation, by saying, that the harvest and techniques which are used by the country US maintain the high standard level for product quality and worker safety. So if any foreign country wants to export the product like apple, the country has to maintain same product quantity and worker safety. Due to this reason, the country US wants to impose the regulation on the foreign apple exporting country.
(b)
But the foreign reprehensive country opposes the country US regulation because. It would be more expensive for the production of the apples. If the foreign trade country would use the country US techniques, the foreign traded has faced unfair trade restriction, because the foreign country would produce the apples with less expensive techniques. But if they would agree with country US condition, they would face loss. So the foreign country would not agree with the restriction.

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A small country's protectionism can be summarized: The typical tariff rate is 50 per­cent, the (absolute value of the) price elasticity of demand for imports iS1, imports would be 20 percent of the country's GDP with free trade, and the protected industries represenT15 percent of GDP. Using our triangle analysis, what is the approximate magnitude of the economic costs of the tariff protection, as a percentage of the coun­try's GDP As a percentage of the gain of producer surplus in the protected sectors
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A Japanese friend asks you to explain and defend American use of Section 301. What will you say
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