Tariff and Non-Tariff Barriers

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Tariff and non-tariff barriers
Tariff and non-tariff effect global financing operations by having an impact on whether countries will build and invest in companies in the home country. If an organization wants to build a company that imports raw material that has a tariff on it, it would make the product considerably more expensive to produce and export. Tariffs do benefit the government by increasing the revenue and also benefit home-based businesses by decreasing foreign competition. The tariff also helps protect jobs in the industry that has eliminated the foreign competition but a negative impact is felt because it causes the consumer to pay more for a product that is imported (Hill, 2004). If a country it prone to levy tariffs on items that an organization may need, it would increase the risk of doing business while located in that company. By having a country manufacture or produce product that can be done for less elsewhere is not a wise utilization of resources and in turn harms global trade.
When foreign countries can enter a home country and sell product for less, people usually see this as a great trade opportunity. However, if that product is manufactured in the home country then the home country not only loses revenue from sales on that product but the economic impacts can run even deeper. With no need to manufacture that product companies will no longer need to purchase the raw materials or hire the employees necessary to maintain the demand. To eliminate this from occurring or to impose a type of trade restriction on a foreign country tariffs and non-tariffs are utilized. General Agreement on Tariffs and Trade (GATT) was succeeded by the World Trade Organization monitors tariffs and promotes free trade (Hill, 2004).
Tariffs can protect the local industries that face competition from imported goods by imposing tariffs. Tariffs are effective and widely used to protect the local industries from foreign competition (Saranovic, 2006). However, this



References: Hill (2004). International Business: Competing in a Global Marketplace. 5th ed. New York: McGraw-Hill. Saranovic, Steven (2006). Import Tariffs. Retrieved June 09, 2008, from Trade 10-1 Web site: http://www.internationalecon.com/v1.0/ch10/10c050.html Understanding the WTO. Retrieved June 09, 2008, from World Trade Organization Web site: http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm World Bank (2007). Non-Tariff Barriers. Retrived June 09, 2008, from Web site http://rru.worldbank.org/Documents/PapersLinks/Section-6.pdf

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