"International Business: Session 6" protectionist policies; economic development programs (export promotion strategy, import substitution strategy); industrial policy (key domestic industries chosen, protected, and promoted); regional agreements.
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Nội dung Text: International Business: Session 6
- International Business
Session 6
- National Trade Policies
Protectionist Policies
Economic Development Programs
◦ Export promotion strategy
◦ Import substitution strategy
Industrial Policy
◦ Key domestic industries chosen, protected,
and promoted
Regional Agreements
- Trade Intervention
Should a national government intervene to
protect the country’s domestic firms by
taxing foreign goods entering the domestic market
or constructing other barriers against imports?
Should a national government directly help the
country’s domestic firms increase their
foreign sales through export subsidies,
government-to-government negotiations, and
guaranteed loan programs?
- Two Types of Rationale for Protectionism
Defensive barriers safeguard
industries, workers, special interest
groups, protect infant industries and
to promote national security (export
controls).
Offensive barriers pursue a strategic
or public policy objective, such as
increasing employment or generating
taxes.
International Business: 4
Strategy, Management,
- National Defense Argument
Country must be self-sufficient in
critical raw materials, machinery, and
technology or else be vulnerable to
foreign threats
Appeals to general public
Protectssteel, electronics, and
machine tools industries, and
merchant marines
- Infant Industry Argument
Imposition of tariffs to give U.S. firms
temporary protection from foreign
competition until firms are fully
established
Powerful economic development
strategy
Which industries should be protected?
For how long?
- Maintenance of Existing Jobs
Jobs in high-wage countries
threatened by imports from low-wage
countries
Forms of assistance
◦ Tariffs
◦ Quotas
- Protection of the National Economy
advanced economies cannot compete with
those in developing countries that employ low-
cost labor, thus governments should impose
trade barriers to block imports
- Preserving National Culture and
Identity
Governments seek to protect certain occupations,
industries, and public assets central to national
culture:
Switzerland imposed trade barriers to preserve its
long-established tradition in watch making.
Japanese restrict the import of rice because it is
central to the nation’s diet and food culture.
U.S. opposed Japanese investors’ purchase of the
Pebble Beach golf course in California, New York’s
Rockefeller Center, and the Seattle Mariners
baseball team, all considered to be part of the
national heritage.
France does not allow significant foreign ownership
of its TV stations because of concerns that foreign
- National Strategic Priorities
Interventionencourages the development of
industries that bolster the nation’s economy.
Countries with many high-value-adding
industries —such as IT, pharma, automotive, or
financial services — create better jobs and
higher tax revenues.
Deciding which industries to support is
challenging; it is difficult to predict which
industries will produce comparative
advantages. May result in continuous
subsidization of underperforming industries.
- Barriers to International Trade
Tariff barriers Non-tariff barriers
◦ Export tariff ◦ Quotas
◦ Transit tariff ◦ Product and testing standards
◦ Import tariffs ◦ Restricted access to distribution
networks
Ad valorem
Specific
◦ Public-sector procurement policies
Compound ◦ Regulatory controls
◦ Local-purchase requirements
- Tariffs
Export tariffs- taxes on products exported by domestic
firms-
◦ Example- Russia charges a duty on oil exports,
intended to generate government revenue and maintain
higher stocks of oil within Russia.
Import tariff (most common) - tax levied on imported
products.
1. Ad valorem - tariffs are assessed as a percentage of
the value of the imported product.
2. Specific tariff—a flat fee or fixed amount per unit of the
imported product—based on weight, volume, or surface
area (such as barrels of oil or square meters of fabric).
Revenue tariff - intended to raise money for the
government, e.g. by taxing cigarette imports.
Protective tariff - protects domestic industries from foreign
competition. International Business: 12
Strategy, Management,
- World Trade Organization
Startedin 1947 as General
Agreement on Tariffs and Trade
(GATT)
Goal: to promote a free and
competitive international trading
environment
Method: multilateral negotiations
Becomes WTO in 1995
Added: Services, IP, Investment, and
- Success in Reducing Tariffs
- Doha Round
Started in 2001, aim for conclusion 2011
Aims for developing countries:
◦ reforming agricultural subsidies
◦ improving the access to global markets
◦ ensuring that new liberalisation in the global economy
respects the need for sustainable economic growth in
developing countries
General Agreement on Trade in Services
(GATS)
Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS)
- Harmonized Tariff Schedule
Most countries have adopted a
detailed classification scheme for
imported goods called the harmonized
tariff schedule (HTS). Because of its
complexity, the HTS can sometimes
be difficult to use.
- Sample Import Tariffs
- TARIC – Info on Tariffs
http://ec.europa.eu/taxation_customs/dds2/taric/
18
- Degrees of International
Integration
Political
Union
Forms Economic
of Union
Inter-
national
Inte- Common
gration Market
Custom
Union
Free
Trade
Area
Removal Common Free Flow Harmonise Political
Internal External Capital & Economic Integration
Tariffis Tariffs Labour Policy
Source: SUDER
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