study guide
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Chapter7GovernmentPolicyinTrade.pptxChapter 7 – Economic & Political Environment
Management 405
Outline: Instruments of Trade Policy
Instruments of Trade Policy
Tariffs and their effects
Subsidies
Quotas and voluntary restrictions
Administrative Elements
Export Controls (Bans on exports of goods)
Local content requirements
Trade Agreements
Bilateral, multilateral
FTAs, customs union, economic union
Global Trading System
GATT, GATS and WTO
Tariff Barriers
Direct taxes and charges imposed on imports:
HTS- Harmonized Tariff System, the system of classification and assignment of duties (import taxes)
Ad valorem, combination – rates can be % of value or a combination of value+ weight; or value + qty
“hidden” tariffs – (AUS/ US/ Wine)
Non-Tariff Barriers
Quotas – restriction on the volume that can enter or leave the country (RARE)
Embargoes – on specific products (such as rice and beef to china, which was in effect since 2003 – now lifted) OR Complete ban on all goods (such as N. Korea)
Administrative
Products approvals and Registrations
Local Business Environment
Tied-up supply chains
Few buyers/intermediaries (Monopolistic and Oligopolistic)
International Trade Promotion
Government Promotional Activities
Information Services
Reports on Foreign Firms – ICP “Individual Company Profile” – assembled by US&FCS
List of potential overseas buyers – FAS – hkg
Information on Government Regulations – country commercial guides
Information on export procedures and techniques – ETAP (Export Training Assistance Partnership
Government Promotional Activities
Export Facilitation Activities
Trade Development Offices abroad – www.trade.gov
Government sponsored Trade Fairs and Exhibitions www.californiaexport.org
Singapore Air Show, HK Food Expo, HKG Int’l Wine and Spirits Fair, Cosmoprof, etc.
Trade Missions
Non-governmental trade promotion
California Chamber of Commerce
Los Angeles Area Chamber of Commerce
American Chamber of Commerce Hong Kong
SEMA
Wine Institute
Administrative Elements
Regulatory Environment
5-10
Export Controls (Export Administration Regulations - EAR, International Trade in Arms Regulations - ITAR)
Ownership Controls – restricted industries
Import Regulations
Regulatory Compliance
Food & food supply
Consumer/Product Safety
National/ Economic Interest
Environmental
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Trade Agreements
Trade Agreements
Bilateral – A bilateral trade agreement usually includes a broad range of provisions regulating the conditions of trade between two (2) countries. These include reductions in customs duties rates, commercial and fiscal regulations, transit arrangements for merchandise, customs valuation bases, administrative formalities, quotas, and various legal provisions....
Multilateral – involves multiple countries whereby trade barriers are reduced or eliminated, and thus increasing the economic integration – essentially same concept as bilateral but negotiations are complicated by the issues and agendas of each party.
Figure 6.3 Forms of economic integration in regional markets
Source: from Czinkota/Ronkainen. Global Marketing, 1e. © 1996 South-Western, a part of Cengage Learning, Inc. Reproduced by permission. www.cengage.com/permissions .
Regional Economic Integration
Global Trading System
Global Platform
Standards and Trading Rules
Communications protocols
Transportation systems
Financial transactions
GATT
The GATT was a multilateral agreement whose objective was to liberalize trade by eliminating tariffs, subsidies, import quotas, and the like.
From its foundation in 1947 until it was superseded by the WTO, the GATT’s membership grew from 19 to more than 120 nations
Today, GATT is managed by the WTO
GATS
The WTO’s General Agreement on Trade in Services (GATS) has taken the lead to extending free trade agreements to services.
Definitions of trade in Services
The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is an attempt to narrow the gaps in the way intellectual property rights are protected around the world and to bring them under common international rules
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WTO
The WTO acts as an umbrella organization that encompasses the GATT along with two new sister bodies, one on services and the other on intellectual property.
By 2016, the WTO had 164 members, including China, which joined at the end of 2001, and Russia, which joined in 2012
WTO
Core Principals
Reciprocity
National Treatment
Transparency
Policing and Enforcement System for Fair Trade
Dumping, Subsidies
Remedies
Enforcement
Multi-lateral Development Agencies
World Bank
International Monetary Fund
Asian Development Bank
Inter-American Development Bank
African Development Bank
