Term Paper on "Trade Barriers"

Term Paper 3 pages (1257 words) Sources: 0

[EXCERPT] . . . .

trade barriers most commonly used.

Of the many types of trade barriers there are that countries use for managing their balance of trade and protecting key industries, three specifically used by many countries are import duties, quotas, and tariffs.

While there have been many efforts to equalize trade between nations and lower barriers, the fact remains that for many nations, their key industries are so critical to their financial stability that government officials feel compelled to continually create a protectionist climate. This is certainly the case in France with the agricultural industry, also with their wine industry, where there are high import duties and tariffs on in-bound food products, so high in fact as to make an import business economically impossible. The U.S. uses many import duties, quotas, and tariffs at times to equalize the balance of trade in a given industry. Throughout the last ten years the quotas on auto imports from Japan and steel from Korea and China are cases in point. Quotas artificially influence the structure of markets and while in the short-term protect industries within the nations enforcing them, create a competitive disadvantage in the long-term as these companies don't have the opportunity to learn from competing more freely in global markets. While most nations' politicians want to protect jobs and manufacturing sectors of their economics, Dr. Michael Porter in much of his work on competitive and comparative advantage illustrates that the best defense from a global standpoint is a strong offense; which translates into the need for countries to allow for global competition in key sectors of their economy so the industries don't become too dependent on government subsidies for survival. Tariffs as well are merely taxes to inflict an economic cost on the trading partner trying to gain access to a protected industry within a nation. Protectionist approaches to using tariffs can protect the most cherished of industries for a nation, Holland for example uses extremely high tariffs to protect is tulip industry, yet in the end the most critical factor to keep in mind is the best protection is a strong ability to compete globally.

In summary, despite many agreements and accords completed to minimize tariffs between nations, going all the way back to 1944 Bretton Woods Agreement completed at the United Nations Monetary and Financial Conference where a global commitment to freer trade was made, there still exists much protectionism in global markets. Only by competing globally daily will highly protected industries become strong enough to survive in the markets they serve.

Name two factors that will increase the demand for labor, and two factors that will increase the supply of labor.

Two factors that will increase the demand for labor is first, a need for greater production due to consumers requiring more of a specific good being produced, and second, the need for greater skills to manage the more complex processes used in the manufacturing of these goods. Factors that increase the supply of labor include immigration, and second, an increase in wages that offset the value of leisure to potential employees.

Both market demand and the need for greater training to fulfill consumer demands act to increase the aggregate demand for labor. In addition, shortage of a specific skill set integral to fulfilling the demand for a specific process or good can greatly increase the demand for a specific type of labor. Take for example the computer-aided design programs that define new homes or custom-built cars; these designers have high levels of labor demand due to their unique skill set. In terms of generating higher levels of labor supply, immigration is by far the greatest potential contributor, specifically in the areas of labor shortage including scientific and engineering professions. The entire H1-B Visa strategy of the… READ MORE

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