...provide special preferences to domestic goods and services to enhance the competition. There are two basic ways of trade protectionism, one is tariff barrier, another is called non-tariff barriers, including quotas, subsides and administrative barriers. This essay is to talk about the main ways of protectionism and its definition with some real examples. Tariffs are import taxes, raising the price of imported products to limit the number of imports, causing a contraction in domestic demand and an expansion in domestic supply (Riley, 2006). Normally, the volume of imports is reduced and the government received some tax revenue from the tariff. While, the Section 201 steel tariff is another case. In 2002, US imposed tariffs on imports of certain steel products for three years and one day (Francois & Baughman, 2003). Immediately, the European Union announced that it would impose retaliatory tariffs on the U.S., thus risking the start of a major trade war (Francois & Baughman, 2003). In this way, the price of both sides got higher, made impacts on each other. Steel tariffs caused shortages of imported product and put U.S. manufacturers of steel-containing products at a disadvantage relative to their foreign competitors. As a result, 200,000 Americans lost their jobs to higher steel prices during 2002. In the absence of the tariffs, the damage to steel consuming employment would have been significantly less than it was in 2002 (Francois & Baughman, 2003). Quotas is...
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...U.S. Imposition of Steep Tariffs on Chinese Solar Panels – Protecting or Hurting American Markets and Consumers? On Tuesday, December 16th 2014 the United States Department of Commerce approved a collection of trade tariffs on solar panels imported from China and Taiwan. Tariffs on these solar panels, ranging from 18.56% to 35.21%, have been in place since earlier this year when the Commerce Department issues a preliminary decision. The case was brought by SolarWorld Industries America, Inc. the U.S. subsidiary of German company SolarWorld AG. SolarWorld alleged that Chinese companies were selling solar panels in the U.S. market below manufacturing cost, a practice known as “dumping”, with the intent being to cause harm to domestic manufactures of similar products. This particular case dates back to 2012 when SolarWorld first successfully petitioned to impose solar panel import tariffs. Chinese manufactures of solar panels then started using solar cells, the central component of the technology used to harvest the sun’s energy and convert it into electricity, made in Taiwan as a means to circumvent the restrictions. This led SolarWorld to again ask the Department of Commerce to expand the tariffs to include Taiwanese manufactured panels. The proposal will next go to the U.S. International Trade Commission for review, and if approved, keep the assessed duties in place for at least five years. A SolarWorld spokesperson has declared this action as a major victory...
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...Steven Wallace Final Research Paper on General Agreement on Tariffs and Trade (GATT) Int 610 Professor S. Dalpour Abstract The history of global trade shows that free, fair, and open trade is not necessarily the norm. If allowed, larger nations would monopolize trade to their advantage and destroy open competition. The purpose of this paper is to review the history of trade to find out the reasoning behind establish a General Agreement on Tariffs and Trade (GATT). To meet this goal, this student will quickly review world history concerning trade, the introduction of GATT, its successes and weaknesses, and the emergence of the World Trade Organization (WTO) as a successor to GATT. From this literary review, I will cite three current examples – within the last decade – on how recent tariffs and trade barriers still affect the United States of America: * 2002 - US Steel tariff * 2007 - Paper tariff on Chinese Paper * 2009 - Violation of North American Free Trade Agreement with Mexico and its effect on US trade Finally, I will give me opinion on whether or not I believe the WTO/GATT is still relevant for 2012 and beyond. Why Was There A Need For A General Agreement on Trade and Tariffs? The history of trade – and protectionism of the trade of goods – is record all the way back to the Roman Empire. Trade at that time was characterized by Roman control over roads and on ships throughout the Mediterranean region. If you wanted to move...
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...Case Analysis – U.S. Tariffs on Tire Imports from China Ramón Alejandro Lomas Iracheta BSM404 International Business Instructor: Dr. Carla Weaver May 24th, 2015 U.S. Tariffs on Tier Imports from China The decision of President Obama supported by the International Trade Commission of imposing a three year tariff to imports of tires from China has caused controversy. The United States Steelworkers argue that the tariff has brought benefits for them, which include more job capacity, increase in production and increase of sales. In the other hand, China called the tariff a “serious case of protectionism” due to the negative economic effects that imports of tires were causing to American employment and domestic production. China argues that while the tariff increases jobs in production sector, it also has a negative effect in jobs of sale sector, now some people who used to sell tires from overseas have lost their job. According to the Business Dictionary (2015) market disruption is “A decline in sales to the extent major economic hardships occur, such as one created by surge in imports at the expense of domestic industry” (p. 1). By following this definition, it can be assumed that the decrease of sales of American tires was caused by the amount of imports of Chinese tires. China is known for its ability of mass production at a low price, many companies opt for choosing China as supplier or workforce, but when it is not controlled, this could cause instability in the...
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...Ad valorem is a Latin word meaning “according to value”. A 100% ad valorem tariff on imports means that the government charges 100% on the assessed value of an imported item. If the assessed value of the item goes down then the cost of the tariff goes down; the tariff goes up if the assessed value of the item goes up. This tariff does not charge on the actual cost of the item but on the assessed value. The response from our firm depends on how large a share of the manufacturing industry it holds in Thailand, the moral stance of the firm, the efficiency of the research and development department, and the firm’s policy and ability to train or re-train workers. The United Nations Industrial Development Organization reported on Thailand in 2002. That report highlighted since 1998 the Thailand government started an Industrial Restructuring Plan (IRP) to pull Thailand out of its economic crisis. Focus of the plan included upgrading technologies; greater productive efficiency; a better-trained workforce that could match the technological development; and to develop stronger internal linkages and strategic alliances with external partners. If our firm has a fairly large share of the manufacturing industry in Thailand then we are in a position to try lobbying with the Thai government in an attempt to have them change their policy on international trade with the US, which restricts imports from the US. Since, according to the UN report, their government identified external partnership...
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...significant progress in moving forward its trade policy reforms and in pursuing a development strategy that recognizes openness to trade as the key engine for growth and poverty alleviation. To a large extent, Laos’ trade policy is now shaped by trade agreements, either at bilateral regional or multilateral fora. To date, Laos has also signed trade agreements with 18 countries, including: Vietnam; China; Cambodia; Burma; Thailand; North Korea; Philippines; Mongolia; Indonesia; Malaysia; Bulgaria; Russia; India; Belarus; Argentina; the United States; Kuwait and Turkey, the most recent and significant one is the bilateral agreement with the US by which Laos accords Normal Trade Relations (NTRs). At the regional level, Laos is participating in the ASEAN Free Trade Area (AFTA) and undertaking commitments under the Common Effective Preferential Tariffs (CEPT) scheme. It is also engaging in free trade area (FTA) negotiations with ASEAN-dialogues partners: China, Republic of Korea, Japan, India, and Australia and New Zealand together as Closer Economic Relation (CER). Apart from that, Laos benefits from the Asia Pacific Trade Agreement (APTA) which was formerly known as the Bangkok Agreement. Despite joining APTA as early as 1975, Laos has not yet had the capacity to offer any concessions but has benefited from the Special and Preferential Treatment granted by the other five participating states (Bangladesh, China, India, Republic of Korea and Sri Lanka). In the long term, Laos will be...
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...Week 4 Case Study Adam Careaga Shorter University BUS 6750 ONLH2 Bill Carson April 5, 2014 Chinese Tires In 2008, the United Sates imported 46 million tires from China, three times as many as it did in 2004. China’s share of the American market leaped from 5 percent to almost 17 percent over the same period, while U.S. employment in the tire industry fell by more than 5,000 jobs and domestic production slumped from 218 million tires to 160 million tires. The Chinese import was causing a market disruption and the U.S. implemented a three year tariff on imported tires. The tariff consisted of a 35 percent tariff for the first year followed by a 30 percent tariff the second year then a 25 percent tariff the final year. The tariffs were place on top of an existing 4 percent import tariff. (Hill, 2011) In the scheme of all the tariffs and arguments over the imports the better question would be who benefitted from this high tariff and who suffered? Tire imports from China show clearly why international economics is different. Consumers should be looking for good-quality products at low prices, but when their purchasing shifts toward more imports of foreign products, it can become a controversial political issue. National government officials have the power to enact policies that can limit international transactions like importing. If the whole world were one country, the issue of shifts in purchasing would be left to the marketplace. Within a country...
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...Introduction The public’s awareness of sustainability promoted the emergency and growth of renewable energy power (e.g. solar PV generated power). Traditionally, SolarWorld US is the dominant player in solar industry in America. However, with the entry of Chinese companies, SolarWorld’s market share has been reduced to a great extent, leading a financial difficulty recently. SolarWorld US needs a strategic change to survive. Based on the SolarWorld USA case study, this report will briefly analyze the solar power industry in three perspectives, namely, industry-based view, resource-based view, and institution-based view to figure out the competitive advantages and disadvantages by comparing to its competitors. Accordingly, strategic actions will be put forward for SolarWorld USA, as well as for Chinese company for their survivals in US market. Industry-Based View Under industry-based view, the strategies taken by MNEs are based on the conditions within the industry the company focus on (Peng 2013). Porter’s ‘Five Forces’ framework outlines the competitive forces within an industry. Respectively, the five forces are rivalry among competitors, threat of potential entry, bargaining power of suppliers, bargaining power of buyers, and threat of substitutes (Porter 1980). On demand side, the government policy initiatives (i.e. federal tax credit) and direct injection of capital drive the growth of the industry, for both commercial and residential purposes. Additionally, the consumer’s...
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...The impact of tariffs on overseas purchase of Chinese consumers Introduction Currently, Chinese consumers have become the largest nationality in terms of luxury spending worldwide. However the biggest problem in the Chinese luxury market is that Chinese consumers make most of their purchases overseas. Bain & Company's China luxury market study (2014) demonstrates that Chinese consumers contribute to more than one third of global consumption of luxury goods, which is nearly 380 billion RMB, but only 30% of consumption, which was contributed by Chinese consumers, is done in Mainland China, and the rest is from overseas purchases. Admittedly, consumption of the luxury products is beneficial for economy, but overseas purchase is an issue that has negative impact on economic development of China due to capital outflow. World Tourism Cities Federation (2014) shows that 44% of the Chinese tourists travel abroad for shopping. The huge price gap between Mainland China and some other countries is the most important reason that result in overseas purchase. Therefore, there is a debate about whether or not to cut down tariffs of the luxury products to solve this problem. Although cutting down tariffs of the luxury goods seems to be an effective way to attract Chinese consumers to make their purchases domestically, in this case, cutting down the tariffs of the luxury products is useless, because reducing import duties has little effect on the price of domestic luxury products...
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...The International Trade of Solar Power International Business The United States is in the midst of a power crisis. Rolling blackouts in California, Mother Nature taking a toll on aged and outdated power infrastructure and Peoples dependence on power are a few contributing factor to this power crisis. The wind and solar alternative energy sources seem to be the way of the future. The only problem is they are not reliable 24/7. Just because the sun is going to shine, and the wind is going to blow tomorrow, does not mean we will have electricity in our homes tonight. Solar power is clean power, seems to be the new catch phrase. You can buy solar panels or lease the panels depending on your current financial situation. According to energysage.com, there are five things to consider. Cost, maintenance, terms, offsets and return on investment are items to consider. Something you may not have thought about is where the panels are made. There are approximately 28 companies that manufacture and sell solar panels. Of the 28, 12 are made in China, and only four are made in the United States. Two of the 28 total companies that manufacture and sell solar panels hold the market share at 17 percent. Both companies Triana Solar and Yingli Solar, headquartered out of China, produce solar panels there. How good are the panels, what is the life expectancy, and how are they being made all come into question. As the largest Photovoltaic (PV) market in the world, 57 percent demand...
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...THE CHINESE MARKET FOR CLOTHING THE CHINESE MARKET FOR CLOTHING Abstract for trade information services ID=42692 International Trade Centre (ITC) The Chinese Market for Clothing. Geneva: ITC, 2012. xi, 92 p. (Technical Paper) Doc. No. SC-11-212.E Survey on Chinese market for clothing - describes the structure and characteristics of the domestic Chinese market for clothing; provides an analysis of the tariff structure of imports by product group; outlines special import regulations, customs procedures, transport, as well as requirements relevant to packaging, labelling, standards, and ethical trading; examines the market potential, the consumer preferences and behaviour; provides an overview of the distribution channels, the major brands, the procurement practices including the use of e-commerce and ICT procurement; highlights the key players in China's textiles and garment market, the possibilities for cooperation along the value chain, and the existing national support schemes; appendices include contacts details of sector related companies in China. Descriptors: Clothing, Standards, Packaging, Distribution, Procurement, Electronic Commerce, Consumer Behaviour, Market Surveys, China. For further information on this technical paper, contact Mr Matthias Knappe, (knappe@intracen.org) 2011 SITC-84 CHI English The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United Nations. ITC, Palais des Nations, 1211 Geneva 10, Switzerland...
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...Project One Activity 1 The four countries I have selected from the given groups include China, United Kingdom, United States and Nigeria. Group 1~ China Demographics China has the largest population in the world. “One Child Policy” has been implemented in China since 1979 which have helped to prevent an extra 400 million births to the country. According to the fifth Census, China’s population was 1.3 billion. China has 1 majority which is called “Han” and 55 minorities. Economic system In the first 30 years after the founding of the PRC in 1949, China’s economic system was planned economy. In 1978, the household contract responsibility system was introduced in the rural area. In 1984, the economic restructuring shifted from the rural areas to the cities. In 1992, China established the socialist market economic system. Culture and Social Structure China’s history is more than 5000 years with diverse customs and traditions. Every ethnic group has its own culture, even some have their own languages and words. There are many dialects in China, and the main language is Mandarin. People’s tastes are varied as well. People from the South prefer sweet, people from the North prefer salty, while Eastern people like spicy and Western people like sour. Legislative System China's legislation includes the legislation of the National People's Congress and its Standing Committee, regulation making by the State Council and its relevant departments, as well as the legislation...
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...Agreement are to: (a) | strengthen and enhance economic, trade and investment co-operation between the Parties; | (b) | progressively liberalise and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime; | (c) | explore new areas and develop appropriate measures for closer economic co-operation between the Parties; and | (d) | facilitate the more effective economic integration of the newer ASEAN Member States and bridge the development gap among the Parties. | | | | The Agreement on Trade in Goods was signed in 2004 and implemented in 1 July 2005 by the ASEAN countries and 20 July 2005 by China. Under this Agreement, the 6 original ASEAN members and China have to eliminate tariffs on 90% of their products by 2010, while Cambodia, Lao PDR, Myanmar and Vietnam, have until 2015 to do so. | | | | | | The Trade In Services Agreement entered into force in July 2007. Under this agreement, services and services suppliers/providers in the region will enjoy improved market access and national treatment in sectors/subsectors where commitments have been made. | | | | | | The Investment Agreement was implemented on 15 February 2010. The Agreement will help to create a more transparent and facilitative environment, and give companies from ASEAN a competitive edge to tap on thriving opportunities in China. | | As of 29th Oct 2011, all Countries had implemented Third Party...
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...THE CHINESE MARKET FOR CLOTHING THE CHINESE MARKET FOR CLOTHING Abstract for trade information services ID=42692 International Trade Centre (ITC) The Chinese Market for Clothing. Geneva: ITC, 2012. xi, 92 p. (Technical Paper) Doc. No. SC-11-212.E Survey on Chinese market for clothing - describes the structure and characteristics of the domestic Chinese market for clothing; provides an analysis of the tariff structure of imports by product group; outlines special import regulations, customs procedures, transport, as well as requirements relevant to packaging, labelling, standards, and ethical trading; examines the market potential, the consumer preferences and behaviour; provides an overview of the distribution channels, the major brands, the procurement practices including the use of e-commerce and ICT procurement; highlights the key players in China's textiles and garment market, the possibilities for cooperation along the value chain, and the existing national support schemes; appendices include contacts details of sector related companies in China. Descriptors: Clothing, Standards, Packaging, Distribution, Procurement, Electronic Commerce, Consumer Behaviour, Market Surveys, China. For further information on this technical paper, contact Mr Matthias Knappe, (knappe@intracen.org) 2011 SITC-84 CHI English The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United Nations. ITC, Palais des Nations, 1211 Geneva 10, Switzerland...
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...MAIN ISSUE On 29th November 2009, it is reported that Chinese government has decided to discontinue importing lobster from Australia. This is due to vexation of Chinese government in regards to the fact that many Australian exporters sold their lobster to China through Hong Kong to avoid high tariff. However, only Australian import that has been stopped; whereas China still accepted imports from both New Zealand and South Africa. The termination of lobster import to China which worth $300 million, will cause staggering effect on SA, Tasmania, Victoria and WAlobster exporters. Collier stated the reason is because up to 80 percent of lobsters caught in Victoria and 60 percent in Western Australia, are sent to China which pay a premium price. This makes China to be the primary consumer in lobster market. As a result, up to 50 cray boats were stuck at open sea because fisherman cannot deal with their catches and they would die without cool aerated water from the open sea. Therefore, many lobster fishers are considering to leave the industry and to seek more profitable income source. This standstill will cause a major demand decrement on lobster; thus forcing the price to go down. It is reported that the port-side price dwindle by almost half, from $45/kg AUD to $25/kg AUD; while retail price went down from $115/kg to $61.5/kg. Consequently, many complaints are received from the fishermen due to their inability to cover up their losses. Chris Beissel stated that fishers...
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