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23 Cards in this Set
- Front
- Back
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Purpose of Trade Protection
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to prevent domestic companies from having to compete with foreign companies in their own domestic markets.
To make competition fairer in international markets |
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Trade Barriers
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allow the domestic companies to charge higher prices,
grow and increase the number of jobs offered make a greater contribution to the domestic economy. Some contribute to government revenue Consumers will pay higher prices and have a more limited selection of goods |
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Customs Service
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monitor imports and/or exports
assess and collect duties Report imports and/or exports against quota protect the country’s borders against illegal entry |
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Harmonized System (HS) - Harmonized Commodity Description and Coding System
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global classification system used to describe most trade in goods based on a six-digit numbering system similar to NAICS
the “language of international trade" based on 97 product classifications called “chapters.” |
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Tariff
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a tax on imported or exported goods
Increase the cost of the goods |
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Specific tariffs
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a fixed amount of money per physical unit of product,
easy to apply and administer, especially on standardized goods provide a degree of protection that varies inversely with changes in import prices |
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Ad Valorem tariffs
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like a sales tax, a fixed percentage of the value of the product
can be applied to products with a wide range of product variation maintain a constant degree of protection even when prices vary |
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Effective tariff
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determines how much more expensive domestic production can be relative to foreign production and still compete in the market
Demonstrates the real impact of the nominal tariff on the prices paid by customers in the domestic market |
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Impacts of tariff
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import tariffs reduce the volume of trade and raise domestic prices of imported goods
producing firms gain and consumers lose burden put on consumers by tariffs that are intended to protect domestic industry |
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Controversy of Tariffs
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tariffs decrease the volume of trade and therefore decrease the benefits of trade
No consumers if there aren’t jobs to support domestic spending |
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Free Trade Zones
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Provisions within trade agreements between countries that are designed to reduce trade barriers and facilitate trade
duty-free entry of specified goods often established within individual nations that are just entering into competitive participation in the global market provide jobs for people in developing countries The goods produced required to be exported – do not compete in the country’s domestic market |
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Process of Free Trade Zones
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Materials imported into the zone duty free
Remain under the control of customs or in a bonded warehouse (a government supervised storage facility) undergo processing/manufacturing within the zone before being exported as finished goods |
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A Qualified Industrial Zone (QIZ)
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a very specialized type of foreign trade zone (free trade zone) that involves more than one nation
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Free Trade Area
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a region made up of two or more countries that have a comprehensive free trade agreement
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A Duty-Free Sales Enterprise
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a retailer selling merchandise from a bonded warehouse or foreign trade zone
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Country of Origin
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the country where goods are wholly obtained
when more than one country is involved, the country where the last substantial transformation is carried out |
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Common Non-Tariff Trade Barriers
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exchange rates
import quotas voluntary export restraints price support programs subsidies for domestic firms |
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Uncommon Non-Tariff Trade Barriers
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Customs procedures
distribution limits and restrictions export quotas government procurement restrictions and lack of transparency import licensing infrastructure related to transport internal taxes and charges investment requirements affecting trade lack of intellectual property protection (copyrights, trademarks, and production processes) minimum or reference prices price controls standards, technical regulations, and certification procedures tariff rate quotas |
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Exchange rates
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determine the ratio at which one currency can be traded for another
depreciating in value causes imports to be more expensive appreciating currency causes foreign goods to be less expensive |
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Import Management Process
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Bilateral Agreement
Quota determined Manufacturers deal with US buyers Letter of credit Production Export visa Transportation US customs at port of entry Tariffs paid by US buyers Shipping to US buyers Stores |
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Voluntary Export Restraints
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Agreements are not formalized into international law
Restrict or reduce export to the agreed country for certain product |
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The US TA Trade Process
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Process that creates and enforce textile and apparel trade rules, policies, and regulations
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Procedure of Building Special Protection
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1. The president generally resists protectionist solution
2. Congress urges the industry’s case 3. The president sees political danger and accept the case for the trade restraints with flexibility 4. Apologia |
