Pls do not handwrite the answer, this is for easy reading Question 2 i)Trade res
ID: 1138167 • Letter: P
Question
Pls do not handwrite the answer, this is for easy reading
Question 2
i)Trade restrictions can be implemented by tariffs and quotas acting on price and quantity respectively or by non-tariff barriers (NTBs). Explain what constitute NTBs ranging from industrial policy, technical barriers, subsidies and government procurement to labour and environment standards. Discuss NTBs’ relative effectiveness and popularity in international economics in the 21st century.
(10 marks)
ii)How do sanitary and phytosanitary standards (SPS), including health, environmental and safety (HES) and even human rights issues, enter and be classified as trade barriers as trade becomes politicized?
(Hint: think of economic and trade sanctions and more nationalistic policies like under Trump’s administration as affecting trade and even NAFTA).
Explanation / Answer
i). Non-tariff barriers are trade restriction other than simply levying a tariff duty. They include -
a. Import licensing - This tool is used for restricting the import of other country's goods in order to protect the domestic industry. Its a document issued by governments to importers. Its a prior permission for import.
b. Pre Shipment Inspection - This is a method to check the quality of goods traded between countries. It is to confirm that the seller is taking into account the specifications of buyers. This is a measure of quality control. Countries use it as trade barriers to restrict imports.
c. Rules of Origin - It is about the origin of the product i.e. where is it manufactured and who is the parent nation of the product. This is a discriminatory policy used to restrict trade especially imports.
d. Quotas - Quotas are the restrictions on the quantity of import and exports. Unlike tariff which put an extra price on the goods, quota restricts its quantity.
e. Voluntary Restraints from Imports - Countries may appeal to their business houses not to import from or export to a certain country. They may also appeal not import more when a crisis occurs.
f. Foreign exchange restrictions - This used by changing the value of a national currency against the currency of other nation. Devaluation is one of the main measures used by countries in order to increase their exports.
The popularity of NTBs in the 21st century is immense considering the fact that an anti-globalization discourse is at the peak in the entire world. Countries are against immigrants because they think that they have stolen the job prospects from the natives. Domestic industry argument is also at peak. Countries like the USA is putting restrictions on imports and on the exchange of technology. The idea of collaboration is diminishing and the counter idea of intense competition is taking place. The NTBs are therefore excessively being used by various nations.
ii). These are standards for health care, environmental safety, and human rights that countries cant put on hold for the sake of trade. WTO report says that all countries believe that trade restrictions are necessary for food safety and health protection. Since a lot of governments have banned the import of Genetically Modified Food products to ensure a healthy life for the citizens. The standard that the government sets for sanitary and phytosanitary standards (SPS) at the national level may not be consistent with that of at international level. This gives them justification to put restrictions in the name of SPS. Recent Johnson & Johnson hip implant controversy is the example of restrictions under SPS. It has been politicised very quickly. Social media sites lead violence in some countries and subsequent restrictions on them are the example of SPS restrictions for the sake of Human Rights.