IBT

CH7

Tariff

tax on import or export

Specific tariffs

fixed charge for each unit

Ad valorem tariffs

proportion of the value

Subsidy

- government payment to a domestic producer

- competing against foreign imports and gaining export markets

Import quota

- direct restriction on the quantity of some good that may be imported into a country.

Tariff rate quota

- lower tariff rate is applied to imports within the quota than those over the quota.

Voluntary export restraint

- quota on trade imposed by the exporting country, typically at the request of the importing country's government

Local continent requirement

- a requirement that some specific fraction of a good be produced domestically

Administrative trade policies

• bureaucratic rules designed to make it difficult for imports to enter a country

Dumping

- variously defined as selling goods in a foreign market at below their costs of production or as selling goods in foreign market at below their fair market value

Antidumping policies

designed to punish foreign firms that engage in dumping

- countervailing duties

Infant industry argument

- oldest economic argument

- new manufacturing industries cannot initially compete with established industries in developed countries

Strategic trade policy

• by appropriate action, government can help raise national income if it can somehow ensure that the firm or firms that gain first-mover advantages in an industry are domestic rather than foreign enterprises.

• gov't subsidies to promising firms

Smoot-Hawley Act

Aimed at avoiding rising unemployment by protecting domestic industries and diverting consumer demand away from foreign products.