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19 Cards in this Set
- Front
- Back
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specific tariffs |
taxes levied as a fixed charge for each unit of a good imported |
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Ad valorem tariffs |
levied as proportion of value of imported good |
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why have tariffs |
-to protect domestic producers from foreign competition by raising price of imported goods -produce revenue for govt |
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subsidy |
govt payment to domestic producer -help domestic producers in 2 ways: 1. competing against foreign imports 2. gaining export markets Ag biggest recipient of subsidies |
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local content requirements |
requirement that some specific fraction of good be produced domestically developing countries use to shift their manufacturing base from simple assembly of products whose parts are manufactured elsewhere into local manufacture of component parts |
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Admin trade policies |
bureaucratic rules designed to make it difficult for imports to enter a country |
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retaliation |
govnts threat to intervene in trade policy as a bargaining tool to help open foreign markets and force trading partners to "play by rules" |
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infant industry argument |
-proposed by Alexander Hamilton in 1792 -many developing countries have potential comparative advantage in manufacturing, but new manufacturing industries cannot initially compete w/ establishes industries to get a toehold -govts should temporarily support new industries until they are strong enough to meet international competition |
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export tariffs |
2 objectives: 1. raise revenue for govt 2. reduce exports from a sector, often for political reasons |
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import quota |
direct restriction on quantity of some good that may be imported into a country -enforced by issuing import licenses to a group of individuals or firms |
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tariff rate quota |
lower tariff rate applied to imprts within a quota than those over the quota ex) ad valorem tariff rate of 10% on 1 million tons of rice into south korea, after which an out-of-quota rate of 80% might be applied |
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voluntary export restraint |
quota on trade imposed by exporting country, typically at request of importing country's govt ex) japans restriction of autos exported to U.S. |
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dumping |
selling goods in foreign market at below their costs of production or selling below fair market value |
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antidumping policies |
-punish foreign firms that engage in dumping -protects domestics producers from unfair foreign competition |
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countervailing duties |
commerce dept imposes antidumping duty offending foreign imports |
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Krugman |
believes strategic trade policy could lead to trade war--> help establish rules of game to minimize the use of trade-distorting subsidies |
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argument against infant industry argument |
1. protection of manufacturing from foreign competition does no good unless the protection helps make the industry efficient 2. this argument relies on assumption that firms are unable to make efficient long-term investments by borrowing money from capital market-->govts have to subsidize long-term investments |
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quota rent |
extra profit that producers make when supply is artificially limited by an import quota |
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2 effects from import tariffs |
1. generally pro-producer and anticonsumer-->while protecting producers from foreign competitors, this restriction of supply also raises domestic prices 2. they reduce overall efficiency of world economy bc protective tariff encourages domestic firms to produce products at home that could be produced more efficiently abroad |
