International Trade Policies and Organizations

International Trade Policies and Organizations

• Crude oil exports subsidies include government payments, cash grants, low-interest loans, tax breaks, and equity participation to help domestic producers compete and gain export markets.
• Import quotas, tariff rate quotas, and voluntary export restraints (VER) limit imports, with quota rent as an extra profit for producers.
• Local content requirements (LCR) mandate a fraction of a good to be produced locally, protecting domestic producers but leading to higher consumer prices.
• Administrative policies, including bureaucratic rules and antidumping policies, can limit imports, protect domestic producers, and address political and economic arguments for intervention.
• Political arguments for intervention include protecting jobs and industries, national security, retaliating, protecting consumers, furthering foreign policy objectives, and protecting human rights.
• Economic arguments for intervention include the infant industry and strategic trade policy, aiming to raise national income and support domestic firms.
• Retaliation and trade war risks are associated with strategic trade policies, which may provoke retaliation and lead to trade-distorting subsidies.
• Domestic policies may be influenced by special interest groups, potentially distorting strategic trade policy to their own ends.
• Strong economic arguments support unrestricted free trade, but governments may fear unilateral trade barrier reductions without reciprocal actions.
• The General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) aim to promote free trade and resolve trade disputes.
• Historical context includes the case for free trade, protectionist trends, and the Uruguay Round's efforts to extend GATT rules, reduce agriculture subsidies, and strengthen monitoring and enforcement.
• The World Trade Organization, encompassing GATT, GATS, and TRIPS, has 164 members and experienced early success, but faced challenges in further reducing barriers post-1990s and amidst global events like the financial crisis, Brexit, and shifts towards protectionism.