国际商务教材6.ppt

INTERNATIONAL BUSINESS Ch. 6 The Political Economy of International Trade Instruments of Trade Policy: Tariffs Tariffs are the oldest form of trade policy; they fall into two categories Specific tariffs are levied as a fixed charge for each unit Ad valorem tariffs are levied as a proportion of the value of the imported good Tariffs are good for government because they generate revenue Tariffs protect domestic producers but they reduce efficiency Tariffs are bad for consumers because they increase the cost of goods Two conclusion: Tariffs are unambiguously pro-producer and anti-consumer. (increase domestic price) Reduce overall efficiency of the world economy. A protective tariff encourages domestic firms to produce products at home and it could be produced more efficiently abroad – an inefficient utilization of resources. Instruments of Trade Policy: Subsidies Government payment to a domestic producer Cash grants Low-interest loans Tax breaks Government equity participation in the company It helps domestic producer in two ways Competing against foreign imports Gaining export markets Subsidy revenues are generated from taxes Subsidies encourage over-production, inefficiency and reduced trade Most of the subsidies are grant to the agricultural products (e.g. US; EU countries, S. Korea) Instruments of Trade Policy: Quotas Import quota Restriction on the quantity of some good imported into a country Tariff rate quota: a common hybrid of a quota and a tariff. Instruments of Trade Policy: Quotas Voluntary export restraint (VER) Quota on trade imposed by exporting country, typically at the request of the importing country Foreign countries agree to VERs because they fear more damaging punitive tariffs or import quotas might follow (e.g. China in the opening case) The extra profit that producers make when supply is artificially limited by an import quota is quota rent Instruments of Trade Policy: Local Content Requirement (LCR) A local content requirement requires s