Protectionism

1. Protectionism

2. Quotas • Quotas introduce a physical limit of the volume (number of units imported) or value (value of imports) permitted. • Their effect is to reduce the supply of imports in the domestic market. This would lead to a higher equilibrium price than that under free trade.

4. Examples • Examples of quotas were found in the textile industry under the terms of the Multi-Fibre Agreement which expired in January 2005 and which led, in 2005, to a trade dispute between the EU and China over the issue of textile imports.

5. Examples • Quota exports to the US were estimated to have increased by 5.56 per cent to $ 4.75 billion during January-October 2003 compared to $ 4.5 billion in the corresponding period last year. • Officials said that the decrease in exports could be attributed to unusually lower temperatures in the US during summer months resulting in a lower export of cotton garments. Besides, some least developing countries, which have received duty-free access, have affected India's exports.

6. 1) CUSTOM PROCEDURES • Procedures carried out during importation or exportation of goods between countries. • Efficiency and effectiveness of procedures has significant influence on: 1) Economic competitiveness of nations and in the growth of international trade 2) The development of the global marketplace.

7. Examples • France seeking relief for domestic producers of video recorders. • The French government decreed on 8 November 1982 that Japanese video recorders were only to be cleared by the customs office in Poitiers which was understaffed. • The French measure was very short lived. This was partly due to the (intended) visibility of the measure. Many such measures are less visible but, in turn, very persistent. • Time-consuming administrative procedures in Japanese harbours, for example, drive up freight costs considerably and thereby constitute a very effective protectionist measure.

8. Examples • EU traders face many problemsin the course of customs clearance procedures in Ukraine. • Long and time consuming process • Requests for additional documents frequently containing commercial secrets • Numerous, often unfounded customs and tax inspections causing delays

9. 2)Imposition of strict standards on ingredients of foods

10. What is it? Administrative Barrier make it difficult for firms to import by imposing restrictions and being 'deliberately' bureaucratic range from stringent safety and specification checks to extensive hold-ups in the customs arrangements.

11. Examples quality standards imposed by the EU on imports of dairy products. maximum residue limit (MRL) for chlorpyrifos in spinaches US beef industry

12. Quality standards imposed by the EU on imports of dairy products

13. The EU is a major force in world dairy trade

14. EU’s food safety strategy: rules on the safety of food and animal feed independent and publicly available scientific advice action to enforce the rules and control the processes recognition of the consumer’s right to make choices based on full information about a food’s origins and contents

15. MRL for chlorpyrifos in spinach • In Japan, MRL is 0.01 ppm. • average daily intake of spinach per capita is 22.8g, radish and cabbage is 47.3g and 37.4g respectively. • chlorpyrifosMRLs set at 3.0 ppm and 1.0 ppm, 300 and 100 times higher than that for spinach. • China is very concerned with the consistency of the chlorpyrifos MRL in spinach fixed by Japan.

16. U.S. Beef Industry Battle • U.S.insistno free trade deal unless • Korea changes its food safety import regulations for beef • recognizes U.S. beef inspections as equivalent • opens its market to cheap U.S. beef imports.

17. 3) Voluntary exports restraints • a trade restriction on the quantity of a good that a country is allowed to export, and the limit is self-imposed by the exporting country

18. Examples Japan imposed a voluntary exports restraint on its automobile exports into United States of America (USA) due to pressure by America in the 1980s. This allowed for USA’s auto industry to have a protection against a flood of foreign competition

19. Its appeal… • due to the requests made by countries that import the good so as to protect their domestic market that produce substitute goods.

20. Advantages of voluntary exports restraints • countries that export the good would prefer to impose their own restrictions than to risk sustaining worse terms from tariffs or quotas • voluntary exports restraints are not under the jurisdiction of regulatory bodies that would monitor the regional and multilateral trade agreements

21. Disadvantages of voluntary exports restraints • no government revenue would be generated and any revenue collected by the government through tariffs or quotas would disappear

22. 4) Trade Embargo • Trade embargo refers to a governments order imposing a trade barrier. • An embargo will restrict all trade with a country, or aim to reduce the exchange of specific goods.

23. Examples Example, on July 29th 2008, US President George W. Bush signed into law the Tom Lantos Block Burmese JADE (Junta's Anti-Democratic Efforts) Act of 2008, which modifies the Burmese Freedom and Democracy Act of 2003 (H.R. 2330). This updated act prohibits "substantial transformation" being used to import Burmese jade or ruby.

24. Advantages of trade embargo • For going on 50 years now, the US trade embargo on Cuba. On the economic side, consumers and non-rent-seeking producers in both countries would benefit. • Sugar in particular would get cheaper in the US as American producers were forced to compete in an open market instead of being “protected” from Cuban cane. • Goods of all types would get cheaper in Cuba as American imports which only have to be shipped across 90 miles of ocean arrive to compete with their European equivalents. Producers in both countries would have new markets opened to them, and capital from both countries would have new, competitive places to flow to.