US Trade Barriers and Globalization
Traditional international trade involves a complex system of trade barriers to ensure the protection of domestic industry and its workers interests. The trade impediments and subsidies include protective tariffs, import quotas, non-tariff barriers i.e. licensing, and export subsidies. Originally, a country's economy acted independently of other nations. The growing trend ever since the establishment of GATT in 1947 is globalization. In globalization, a country acts as a part of a free trading community consisting of member nations around the globe. As a trading community, trade problems can easily be resolved through negotiations rather than a trade war (McConnell 104-105).The US government employs the use of protective tariffs and export subsidies to protect and aid domestic industry. The two types of tariffs used on imports are the Antidumping (AD) duty and the Countervailing (CVD) duty. These duties shield domestic industry from foreign competition. By raising the price of imports, domestic products become more attractive to the consumer, i.e. the phrase "Buy American!". Export subsidies are government payments made to domestic producers. The payments allow lower operating costs, enabling producers to compete on the
Countervailing duties are used to help industry compete against foreign subsidized industry. A country will subsidize an industry it determines cannot compete fairly on the open market without support. Thus, the country makes government payments to offset the operating costs and in turn, lowering prices. For example, Atlantic salmon from Norway is subsidized by their government. This causes the price of Atlantic salmon to drop on the open market. Domestic producers cannot compete with Norwegian prices. As a result, a CVD is imposed on salmon (Import). Dumping is the selling of a product on a foreign market at a price "less than fair value" (LTFV). This practice can cause material injury to the domestic industry producing a similar product. To counteract this problem, an AD (antidumping duty) is taxed onto specific imports to raise the price. An example is the duty on Belgium Sugar. Untaxed, Belgium sugar would sell on the US market for a lower price than domestic growers causing internal economic effects (Import). Trade barriers are short term trade solutions. In the long run, it is not an efficient means of international trade. Consumers are forced to pay for a cost benefiting an industry and not themselves. In response to a trade order, an effected country may put up trade barriers to offset those of another country. The end result is a lose-lose situation for both countries. Free trade and globalization are the only effective means to generating economic increase worldwide. The amount of products with CVD orders is small compared to AD orders. The products are: carbon steel flat products, stainless steel plate in coils, iron construction castings, brass sheet and strip, carbon steel flat products, new steel rails, pure and alloy magnesium, sugar, cut-to-length carbon steel plate, in-shell pistachios, grain-oriented electrical steel, seamless line and pressure pipe, oil country tubular goods, certain pasta, stainless steel wire rod, top-of-the-stove stainless steel cooking ware, structural steel beams, fresh & chilled Atlantic salmon, and cotton shop towels (Antidumping). Specialization and eco
Some common words found in the essay are:
Import Currently, Antidumping Countervailing, GATT January, , Antidumping Specialization, Clinton Trade, Canada Established, DOC Dumping, Tariffs Trade, American Export, stainless steel, carbon steel, trade barriers, steel plate, domestic industry, carbon steel flat, flat products, steel flat, free trade, export subsidies, atlantic salmon, steel flat products, stainless steel wire, steel wire rod, line pressure pipe,
Approximate Word count = 1439
Approximate Pages = 6 (250 words per page double spaced)
|
