Import Controls And International Trade Essay

637 words - 3 pages

Trading within the economy is an essential part in ensuring the growth of the economy and firms’ profit. International trade has been going on for years; however, over the recent years in particular, there has been a vast expansion on import controls, this is due to various reasons, these reasons are to help growing firms with their domestic status.
Certain industries possess a potential comparative advantage but have not yet exploited the potential economies of scale. Thus, short term protection from established foreign competition allows the infant industry to develop its comparative advantage. At this point the protection could be relaxed, leaving the industry to trade freely on the international market. The danger of this form of protection is that the industry, free of the disciplines of foreign competition, will never achieve full efficiency.
Additionally, with the increased import controls, there will be a reduction/protection from dumping which refers to ...view middle of the document...

The main problem with this is that import controls do not address fundamental issues of a lack of international competitiveness - and that trade barriers simply as a device for controlling a trade deficit do not wash with the World Trade Organisation.
However, with the import controls, there also disadvantages. For One, there will be a great loss of welfare, this is because protection will limit consumers’ access to goods and services which are produced domestically, thus restricting choice. Domestic goods may be more expensive or inferior to their improved counterparts. The welfare loss will occur due to economic inefficiency as countries are not specializing in those goods and services where they have the lowest opportunity cost.
Furthermore, firms that are protected from competition have little incentive to reduce production costs. These disadvantages must be considered carefully by governments. This underlines the fact that the consumer is weakened with power as they are restricted. There is the danger that one country imposing import controls will lead to retaliatory action by another leading to a decrease in the volume of world trade. With that in mind, a volume of world trade reduced would lead to a general slow movement of the economy as trade is restricted and highly controlled.
Having said this, increasing import controls may have heavy effects on LEDCs (Less Economically Developed Countries), as international trade should assist them into becoming more integrated in the world economy which should lead to successful domestic firms establishing contacts with the international capital markets. Furthermore, increasing levels of trade should lead to a foreign trade multiplier effect which should reduce both the levels of unemployment and poverty.
All in all, it is fair to say that international trade is a highly beneficial part of the global economy, as multiplying effects can lead an increase to social welfare. However, it can also be fair to say that perhaps in some cases, the imposed import controls may be beneficial, to an extent. If import controls do find that boundary of course, then the global economy can still benefit from international trade.

Other Essays Like Import Controls and International Trade

International Trade And Comparative Advantage In The U.S. And Mexico

804 words - 4 pages I have been asked to use my experience in Mexico to discuss International Trade and Comparative Advantage. I will be using the U.S. tobacco companies and tobacco farmers in developing countries as examples to my discussion. I will be addressing the following five questions.Explain why the U.S. would subsidize the short run costs of production for tobacco farmers in foreign countries and do these practices guarantee the tobacco farmers a profit

2.2.1. the Importance of International Trade, Economic Integration and Global Markets to Uk Business Organisations

753 words - 4 pages International trade is the exchange of goods and services between countries. The exchange includes import that the countries buy goods or services from other countries outside and export that the countries sell goods or services overseas. Trading of goods is available with clothes, food, stocks, wines, jewellery and many more products. Trading of services is also done like banking, consulting, tourism, or transportation. The international trade

Barriers to International Trade- Non-Tariff Barriers and Infrastructure on Freight Transportation

3091 words - 13 pages Barriers to International Trade- Non-Tariff Barriers and Infrastructure on freight transportation Intro Average applied tariffs on industrial products have declined from 15.5 per cent in 1990 to 7.9 per cent in 2003.[1] Yet, the volume of international trade is still less than one would expect from observed differences in factor endowments, tastes and technology between countries (Trefler, 1995). A possible explanation of the missing

International Trade

994 words - 4 pages . Importance of International Trade to the UK economy: United Kingdom was one of the most open economies in the western world and twenty years ago, foreign exchange controls were abolished and its financial markets have been gradually deregulated which results high and rising percentage of total national output in trade with other countries. International trade has been vital for the UK economy to develop throughout the colonial period, and the post war

Balance of Payment, Current Account, Capital Account

1001 words - 5 pages the world through the export, and also Turkey supply some of its requirements from other countries. Turkey didnt have the energy resources and It started to import energy from other countries. Then There started to became a deficit on foreign trade. Current account deficit : From 1975 to 2000, ( except 1994 crisis) Turkey's current account deficit was not so much problem. The biggest rising on current account deficit happened during the 2001

Iimpact of International Trade Fair Participation on Export – an Empirical Study of China Based on Treatment Effect Model

5490 words - 22 pages not show any significance with export. The result can be described in a way that import of least developed countries are not affected by the promotional activates of the exporting country. It may because of least developed country’s focus on the import of necessary goods and also they might be subject to strict budget constraint. Likewise model 2 also strongly indicates that the international trade fair participation is effective for the export of

How Freer Trade Can Help Feed the Poor

2602 words - 11 pages way of raising income and escaping poverty. In turn, the lack of export production reduces the country’s ability to earn foreign exchange and undermines its structural capacity to import food and other products. And when many developing countries protect their food crops by imposing import tariffs, they are effectively creating high barriers to SouthSouth trade. Thus, although there is a case to be made for temporary limited safeguard measures for

Identification of the Mexican Monetary Policy and the Fiscal and Monetary Indicators

1298 words - 6 pages impetus. This reorientation strengthened the government's position for radical trade liberalization and the establishment of economic integration treaty with the United States and Canada. This model has been heavily criticized because it has good macroeconomic outlook, but it is fatal to microeconomic levels. It went from an obese state into an inoperative one. Conclusions The import substitution model is of great importance, because the

Cameroon Trade and Development Policies

2682 words - 11 pages Geneva School of Diplomacy and International Relations – Spring Trimester 2010 Topic: Cameroon’s Trade and Development Policies: Analysis and recent Tendencies Student: ANYANGWE Fombang Claudius Course: International Trade and Development: 21st Century Issues Instructor: Prof. Dr. Gustavo Olivares Abstract: Cameroon was one of the few privileged countries to join the World Trade Organization (WTO) in 1995 as a founding member while

Unit 16 P1

958 words - 4 pages regulate trade .basically this means there is legal while others are illegal for example an illegal form of trade would be neibouring countries importing drugs illegally in the country. In addition due to globalization, trade restrictions have been significant such as tariffs and import restriction have been reduced as a result of the international liberation based of facts since the second world war average tariffs for industrial goods have

Communication

2626 words - 11 pages country will restrict the exports of particular goods to some import countries and this is mostly under authorization by the importing country. The difference between this system and the quota system is that it is fully under the influence of the politics of both the import and the export country. They do cause rise in prices of products, and they indirectly affect the imports of producers in other nations in the international trade. The export

Related Papers

International Trade And Finance Paper

1053 words - 5 pages International Trade and Finance Keith De Luca ECO/372 March 25, 2013 Dr. Godwin Quashigah International Trade and Finance Good afternoon ladies and gentlemen, my name is Keith De Luca, Speaker of the House, United States Senate. The U.S. economy has been hit hard since the attacks on the World Trade Center’s 12 years ago. It’s been one of the worse financial states of our economy since the Great Depression, but as of 2009 we have been

International Trade And Finance Speech

774 words - 4 pages International Trade and Finance Speech By: Lauren Peters February 27, 2014 ECO/372 Hello every one today we will be discussing the United States macro economy. I will go into some detailed avenues helping to break down and explain everything into laymen’s terms. I hope from today’s interview you are able to get the information you need for your article. I am going to be discussing the government’s surplus of imports, international trades

Module: Logistics And International Trade Essay

1189 words - 5 pages UNIVERSITY OF LIVERPOOL ON-LINE DEGREE PROGRAMME MODULE: LOGISTICS AND INTERNATIONAL TRADE FACULTY MODERATOR: Dr Armin Zehtabchi STUDENT: RICHARD WALWASA ASSIGNMENT QUESTION WEEK 4: Question: Read the paper and evaluate the arguments put forward by Professor Christopher to arrive at a conclusion about what makes up the essential characteristics of effective logistics. What value does his thesis that there are 'three feasible

Bribery And Corruption In International Trade

1536 words - 7 pages to provide discussion about bribery and corruption in international trade example in vary different point of view in according to the principal ethical system suchlike religious, philosophical and ‘natural’. It will anayize the case of Siemens bribery scandal related to ethical issues. Bribery is a most important issue of concern to many companies. Incidents of bribery vary across many countries. Not everyone has the same opinion about this