Entoni Salic IA 3: “Protectionist Measures Expected to Rise, Report Warns”

Entoni Salic IA 3 “Protectionist Measures Expected to Rise, Report Warns”

The increase in protectionist measures will have devastating effects on trade; the possibility of trade wars is increasing as seen with the US – China dispute. The overall effect on global trade is estimated as a 10% shrinkage in 2009. The implementation of export subsidies (an amount of money paid by the government to a firm, per unit of output) and the increasing of tariffs (taxes charged on imported goods) will definitely be the major contributors to this major shrinkage. By considering the adding of subsidies to their exports, countries will give an unfair advantage to their companies that are selling in foreign markets. The effect of this maneuver would be devastating to the local producers of the country for the good being unfairly subsidized; there would then be retaliation by the country, thus decreasing trade. A tariff would have a similar effect but instead of hurting local producers, it would hurt the exporters of the country.

Sijmen van Groningen IA # 3: EU will retain light bulb tariff

Economics Internal Assessment Draft

Economics Internal Assessment Draft

EU will Retain Light Bulb Tariff

Sijmen van Groningen

A tariff is defined as a duty imposed on a good when moved across a political boundary. Governments essentially use this worldwide to protect its domestic producers and control employment rates in their countries, however this generally comes at a price as imposing a tariff neglects consumers of cheaper goods. For example, a country imposes a tariff on foreign chocolate, consequently protecting the countries domestic chocolate producers from foreign chocolate producers who are more efficient and provide cheaper chocolate, thus the government is able to protect its domestic chocolate producers, however raising the price of chocolate for domestic consumers as the chocolate is now more expensive then it would have been without the imposed tariff. In this case the EU is prolonging a tariff on Chinese energy efficient light bulbs in order to protect its domestic energy efficient light bulb producers.

Sean Campbell IA 3 “Samuda Reduces Cement Import Quota”

Jamaican Quota

This article is about the decision of Karl Samuda, minister of industry and commerce for Jamaica, promising a 20% quota on imports of foreign cement producers, but instead he returns to his previous decision and only allows 15%. A quota is a physical limit on the numbers or values of goods that can be imported into a country. The main producer of cement in Jamaica is the Caribbean Cement Company (CCC) which has control over the market of cement at this point, and by allowing almost no cement imports to come in they have a monopoly power over the domestic market. A monopoly is one firm producing the good so the firm is the industry, new firms are stopped from entering the market, and this industry will make abnormal profits in the long run. According to a report last year, the CCC has a market share of 84%, while its goal is to have 100% control over the cement market in Jamaica. Samuda is also accusing foreign producers for the dumping of cement on the local market. Dumping is the selling by a country of large quantities of a commodity, at a price lower than its production cost. One of the foreign producers is Portland Grey, a cheap Asian based company, another is an American cement company called Vulcan. These two companies have been trading in Jamaica below fair market prices. Samuda says that anti-dumping measures will have to be made in order to protect domestic producers.

Chris Schnick IA #3: China moves to retalliate against U.S Tire Tariff

Economics

Earlier this year on September 11^th, President Obama opted to impose a tariff on tires imported into the United States from China. Throughout this process, Obama strives to strengthen domestic tire industries as over 5,000 jobs have been lost as a result of Chinese tires tripling in the market. The United Steelworkers Union considers the overall benefits and imposed tariff amounts (35% in the first year, 30% in the second and 25% in the third) a particular success. The economic output of China is roughly 13 times of greater importance in relation to products exported from the U.S into China; therefore it was inevitable that China would retaliate with similar or other trade barriers. However, the Chinese economy relies heavily on exports to the United States, whereas the American economy is far less dependent on exports into China. Hence, the Chinese Government decided to retaliate through the imposition of a tariff on American exports; automotive products and chicken.

Ofir Herbst IA # 3 “Fortress Asia: Is a Powerful New Trade Bloc Forming?”

Ofir Herbst  -IA 3 -

First Paragraph

The recession period still causes a great struggle for the entire world market. Protectionist measures are now part of the main agenda, as countries favor protecting their own industries rather than open up to international commerce and increase the risk of an economic collapse. But contradictory to all these countries, the part of the world that has been hit hardest by the trade crash is taking a different approach. Asia is opening up its regional markets, with increased involvement in number of free-trade agreements (FTAs) signed by Asian countries – which has grown from just three in 2000 to 56 by the end of August.

IA_3_Draft

Sapir – IA

sapirs ia

The Bank of Israel has been implementing expansionary monetary policy to combat the recession that hit last fall. This entailed reducing interest rates thus increasing private investment and pushing aggregate demand forward on a Keynesian view of the country’s economy. The monetary policy has seen to be effective as previous projections of a 1.5% contraction in GDP were replaced by a 0.1% growth prediction.

Ryan Economics IA #3: France’s raised pulse-crop subsidy watched from abroad

Internal Assessment #3

Internal Assessment #3: Ryan DillonArticle:  http://www.country-guide.ca/West/issues/ISArticle.asp?aid=1000339929&PC=FBC&issue=09022009

Canada has been observing France, and also the rest of Europe’s protein crop production such as peas, lupins and fababeans. The reason Canada has begun to observe their production is because Canada is finding it more difficult to export their goods to France and sell them easily as Frances goods are produced more cheaply and have a greater quantity.

Abhishek Puri IA #3 “India urged to soften stance on tariff cuts”

econ ia

A tariff is a duty imposed on goods when they are moved across a political boundary. In this particular case study, the Australian government is calling for a cut in tariff by Indian authorities on Australian chemicals, auto components and electronic items. One must assess the effects of the reduction of tariffs that are being called for by the Australian authorities. On one hand, a reduction in tariff on these Australian goods will benefit Australian producers as lower costs will encourage an increase in supply in the market for these goods which may increase revenue for the producers and spur growth of the Australian export industry. On the other hand, a reduction in tariff on these Australian goods may hamper the profitability of domestic Indian producers as Australian goods at a lower price in the market, will begin to look increasingly feasible for the Indian consumer.

Sandra Ciubuc IA #3 U.S. Tariffs on Chinese tires spark concerns over protectionism

Sandra Ciubuc ECON IA 3

The article comments on the US’s imposition of tariffs by 35% which causes concern.

Tariffs are taxes on imports, effectively raising the price of products whilst reducing supply. Thus, domestic producers obtain an artificial comparative advantage

Although Obama apparently believed in free trade, his “order raised tariffs by 35% in the first year”. The duties imposition on tire imports from China between January-July, worth $1.3 billion, is done under the pretext that these threaten to cause market disruption to domestic producers. However, what constitutes a real export threat to justify the tariffs is open to debate. As a result, “China in accordance with the World Trade Organization (WTO) disputed settlement process”, as well as “launched anti-dumping and anti-subsidy investigations into U.S. chicken products and an anti-subsidy investigation into automobiles produced in the U.S”. Subsidies are amounts of money paid by governments to firms, per unit of output which have the effect of decreasing the firm’s costs. If America is found to be subsidizing its chicken and auto industries, or dumping products, this may have an immediate effect over the US economy that relies on these exports; therefore having more countries applying trade barriers towards US goods is harmful to the economy especially in the uncertain global economic conditions.

Julia Grabowska IA #3: “EU states demand review of milk quota expansion”

Julia Grabowska IA 3

First paragraph:

A few states belonging to the European Union have asked the EU Commission to reconsider the “expansion of the milk quota.” A quota is a limit set on the amount of goods that can be imported into a country; it is a trade barrier implemented to protect domestic producers from foreign competition. The EU states had initially set the milk quota, as shown in Figure 1, to ensure that those involved in the production of dairy are not harmed by market fluctuations or lower prices set abroad. The implementation of the quota resulted in a shift of the supply curve to the right from S(EU) to S(EU+quota). The EU producers were thus supplying 0Q1 and Q3Q4 at a price of PQuota, while before the quota they had supplied only 0Q1 at PW. Their revenue increased from a to a+c+d+f+i+j. On the other hand, foreign producers, who used to supply Q1Q2 and whose revenue was b+c+d+e, are now limited to Q1Q3, with a revenue of b+g+h. Although theoretically they do not have to be harmed, it is probable that the increase in price was not so immense as to cover their losses; g+h were probably smaller than c+d+e. One ought to realize that consumers are harmed by this, as the prices have risen from PW to PQuota; also, there is a loss of consumer surplus of k as they are buying less wheat at higher prices.

Katerina Balta IA #3: “Eurogroup to discuss exchange rates on Monday”

Katerina IA # 3

An exchange rate is the value of one currency expressed in terms of another currency, for example when “Euro zone finance ministers discuss exchange rates” they are actually examining the value of the European currency, the euro, in terms of the American dollar and the Chinese Yuan, where 1 € = US $1,4994. They are concerned about “euro’s further rise in the future”, in other words the appreciation of the euro against the dollar. There has been an upward trend for the value of the euro: “it has become almost 20 percent more expensive in dollar terms since the start of the year, rising to 14 month highs against the U.S. currency”, and it has made similar gains against the Chinese yuan, “which remained virtually pegged to the dollar in that period”. When a currency (yuan) is “pegged” to another currency or commodity, its value is fixed to the value of that other currency (dollar), and as the value of the dollar changes, so does the value of the yuan. This is a fixed exchange rate, in contrast with a managed exchange rate where the value of the currency is allowed to float but with some element of intervention from the government, like in the case of the European currency. The exchange rate for the euro is determined by demand for it and supply of it on the foreign exchange market, so long as it does not move out of the band of lower and upper exchange rates the European Central Bank (ECB) has set, which are not known to the public. What we see happening here is the value of the euro constantly increasing against the dollar, and this causing concern to the Euro zone finance ministers, probably because it is approaching the upper limit they have set. We are going to examine how the value of the euro increases in the foreign exchange market, the impacts of this on the European economy, as well as the tools available to the ECB to regulate the value of the euro.

Ramona Popescu IA#3:U.S. union files new trade case against China

Ramona Popescu IA#3

This article discusses the decision of the United States to take protectionist measures first against tire imports and after coated paper from both China and India. This decision comes after The Steelworkers trade union together with NewPage Corp paper manufacturers complained that they are having a very hard time given the cheap products that China and India import to the U.S. The U.S. International Trade Comission is going to analyze two important factors in order to make a decision. One argument for protectionism is China and India are dumping their products into the Unites States. Dumping means selling a large amount of products to a country at a lower price than in the country where the products are being dumped. This is a factor that affects the domestic production in that country as people prefer buying cheaper products which are the imported ones, not the domestic ones.

Casey Leek IA #3 “Sugar Prices Reflect a Commodity Rife with Regulation”

Article Site: http://www.businessweek.com/bwdaily/dnflash/content/aug2009/db20090821_065859.htm

Commentary Link:  ECONOMICS IA #3

First Paragraph:
The sugar industry is one of the most protected industries in the world. Sugar prices worldwide are rising and governments are taking action to protect their sugar producers but while they protect one group of stakeholders, another is suffering. The USA and Thailand protect sugar producers. The countries use different methods to try to fix their problems; the USA uses quotas while Thailand uses tariffs. Protectionism, the name for the methods governments use to ‘protect’ industries is a controversial topic because not everyone benefits.

Lily – IA3 draft

econ draft IA3

This article discusses China’s manipulation of its currency (the yuan) and its devaluation in particular. It also discusses the negative criticisms surrounding such manipulation and the protectionist measures put in place to retaliate it. Devaluation is when a government intervenes in the foreign exchange market to decrease the value of its currency. Protectionism is putting up barriers to trade by governments or international organizations to prevent foreign take-over of local markets and companies.

Julia Salomons IA #3: China raising import quota

Julia Salomons’ Internal Assessment 3

Amongst countries all over the world trading goods and services help and benefit all, however there isn’t always free trade, which means no barriers goods and services are allowed to move freely between the two countries. There are countries who believe that free trade does not give them the benefit that they need. That is why some countries protect certain goods and services from import. This is usually referred to as “Protectionism.” There are a many reasons for which a country would impose protectionism: protection of domestic employment, protection from low-cost labor, to prevent dumping, etc. to name a few.

 

Noamme Elisha IA3 : Russia may raise beef quotas, cut poultry and pork quotas.

In order to protect the market for meat, Russia proposed to cut the quotas on poultry and pork, and increase the quotas for beef in 2010. A quota is a limit on the number of goods or services that can be imported into a country. It is mostly used for protectionist measures. In this specific case, Russia wants to impose quota restrictions on both poultry and pork so that they can protect their own domestic producers, and increase the quota for beef in order to make sure that they are not dependent on only one source for their beef consumption.

NOAMME IA3

ARTICLE

 

Min Woo Kim IA #3: “Chinese Export Quota”

Min Woo Kim’s Third IA.dox 

 

 The Japanese Government is in alert as China has put an export quota. Quota is a protectionist trade restriction which limits the amount of goods permitted to be imported with a specific country. However, in this case, China has put an export quota which is a restriction on goods permitted to be exported. This means that China is willing to decrease the revenue which they get by exporting goods. In Japan’s point of view, it will have the same effect to the market of metal as if the Japanese government had put quota on the Chinese good. Therefore when the graph is drawn, the basic quota graph will be drawn in Japanese point of view.

Oana D IA 3: “Mexico imposes a tariff on US goods”

IA 3 draft Oana

http://www.reuters.com/article/politicsNews/idUSTRE52H1BQ20090318

Mexico is planning in adopting a protectionist measure to protect its domestic industry from USA. An import tariff would be used, meaning a tax placed on imported goods.  The purpose of the tariff on “a list of 90 imports worth $2.4 billion” is protection against foreign competition. This measure was taken after “Washington banned Mexican trucks from US roads violating the NAFTA”. Tariffs increase the price which must be paid for the goods by domestic consumers, since foreign producers need to pay additional costs to export their goods. By increasing the prices of imported good in comparison to the price of domestic products, consumers will be more encouraged to buy the cheapest products, thus increase consumption of domestic goods and decrease the demand for the higher priced imports. Mexico has not included staple products such as rice and corn in the tariff scheme so that the lower class families in Mexico will not be highly affected by the tariff ending up in causing “more damage to a home country’s interest as opposed to the foreign country”.

Noam Amiel Internal assesment 3 ” China complains US chicken dumping”

China complains about US chicken dumping due to subsidies Noam A

The US is subsidizing their domestic chicken products that are being exported to china. China complains that since a lot of the US chicken products are being imported to them, the subsidy is a problem as it causes “dumping”(very low priced chicken) into China. Furthermore they say that it is hurting their domestic industry and the global economic crisis.

Tal Krenzia IA#3 ‘Chinese Textile Quota”

Tal Krenzia IA 3  

The WTO issued a policy in which China has obliged not to encourage textile and apparel exports by government subsidization. Through this, on January 1^st 2009, the U.S has removed the quote on Chinese imported textiles. Despite China’s promise, China continues to export cheap Chinese textiles, maintaining over sixty three subsidies.