Other Trade Barriers PDF

Other trade barriers Government legislation Sometimes a country will not be able to set tariffs or quotas because of trade agreements or membership in a trade bloc, this means they need to come up with other ways of protecting their domestic industries from floods of cheap imports...

Other trade barriers Government legislation Sometimes a country will not be able to set tariffs or quotas because of trade agreements or membership in a trade bloc, this means they need to come up with other ways of protecting their domestic industries from floods of cheap imports One of these is wrong, can you They can do this through legislation e.g. No fakes, safety spot the mistake? of toys etc. Benefits of using government legislation to restrict imports Government legislation can be a very powerful tool in preventing fake imports into countries For example any toys imported into the UK must have a CE mark This indicates that the product conforms to EU safety regulations The added benefit is it means customers can trust the products that they are buying are genuine Research: CE mark Find out what the CE mark is on labels that are put on toys How effective is this legislation in preventing cheap imports of toys into the UK Which countries is this legislation aimed at restricting imports from? What is the Toy Safety Directive? Drawbacks of using government legislation to restrict imports Every import into the UK cannot be checked 2% are fake (according to the OECD) so no matter how many laws a country has it cannot prevent ALL fakes from arriving on their shores The profits go to organised crime and can be in any industry including medicine, machinery and clothing Definition: Subsidy A subsidy is a sum of money paid by a government to a producer to help keep the price of that particular good low, thus protecting it from cheaper imports. Domestic subsidies Subsidy is a way of a government protecting their domestic markets Money is given to local producers to make their goods cheaper on the domestic market This artificially raises the price of foreign goods relative to domestic goods therefore, reducing demand for them Benefits of domestic subsidies Encourages businesses to increase their production, this can lead to more jobs being created and taxes paid back to the government Can give domestic producers first-mover advantage when exporting to emerging markets (BRICS, MINT) Can help domestic businesses to gain economies of scale from extra production Drawbacks of domestic subsidies Domestic subsidies are a form of protectionism and so are open to retaliation from other nations in return. This may mean higher tariffs or quotas on our exports. Subsidies essentially encourage business activity that would be unprofitable and inefficient without the government’s financial help in the form of the subsidy Research: Subsidised industries Find out which industries in the UK the government subsidises as a way of protecting them against cheaper imports How effective have these subsidies been at protecting these industries? What benefits do these industries gain from these Click the protectionist actions? HERE start now button to search