The international trade policies that are set by each country, this is done to protect the citizens of their country and the currency from being exploited. International trade takes place since not all countries produce everything at the most efficient rate and cost. This trade allows people to exploit abundance of resources I other places while fulfilling their demands. International trade affects the economies of each country, as there is an inflow and outflow of currency, US dollar being the standardized currency all over the world. Some countries come together and form an Association for their mutual benefits, eg European Union, ASEAN etc. international trade highly influences global events in the world as the rise of one nation can lead to the rise of another and the downfall of a another nation. The exchange of goods and services allow an increase in global connection, global economy, and efficiency. Some country allow free trading of goods, not imposing any tax, and sometimes impose heavy tax on some of the goods. Eg Dubai is tax free, trading within the ASEAN countries is tax free for some goods, import of cars are taxed heavily in Singapore though in the ASEAN territory and also in India.
POLITICAL ARGUMENT FOR INTERVENTION
While trading internationally there is some norm and rules are to be followed as per the country of trade, these are regulated mainly through tax implications and quotas. These taxes are set by the government of a country to reduce or increase trade of a certain good. Though we may argue that there must be no tax implied on any international trade, but that is not possible and thus there are political interventions, which regulate trade. These political arguments for trade interventions are: -
PROTECTING JOBS AND INDUSTRIES
This argument suggests that the domestic people must be protect from the outsides cheaper imports of employers as this hamper the output of the local, causes higher unemployment rate and thus leads to lower incomes and economic growth. The resources of the domestic countries get unevenly and inefficiently utilized. There are some industries in the country which are not yet risen or grown to extent for international competition thus they need to be protected by the government as they are rising, still have high costs of production, thus leading to higher prices for consumers. They require government protection till the time efficiency has reached, this takes a very long time due to lack of competition.
Eg: Singapore: there are heavy rules and regulations formed recently to avoid immigration of cheap workers from outside (India, Bangladesh, Philippines) as this causes unemployment for the local people. Also any company being formed in Singapore must have 90% of their employees as Singaporeans.
Eg: India: there is no foreign investment allowed in the railway or the airline sector as this hampers the benefits for the local, only recently a minimal allowance (10%) was allowed.
There is a lot of toxic and harmful waste that is generated for the production of any product, these have to be disposed off, and thus a country allows only its domestic company’s up to a limit and do not allow the toxic waste of any other country to be dumped in its region. Some countries also tax products heavily that causes harm to the environment; this is done to reduce the impact on the environment of the country.
Eg. European countries do not allow foreign countries to dump their waste in their country, but the companies of the local company dump their waste in other countries. The vehicles that are more than 10years have to be discarded in Singapore due to heavy pollution, Denmark and other European countries to have a similar policy.
Eg. Countries like Singapore to protect the environment, tax imported vehicle (cars, bikes) heavily and issue only a certain number of vehicles on the road each year....
Please join StudyMode to read the full document