Distinguished guests, ladies and gentlemen, hallo to all. First of all I would like to take this opportunity to thank everybody who is here, since I know you have taken time off your busy schedules. I will try to be as brief and concise as possible since I understand you have other obligations to undertake. The following is a presentation on my analysis of tariffs and trade restrictions with the main view point of the US as well as the international community.
Before we get into deeper details, it is important that we understand the meaning of tariffs and trade restrictions. The concept refers to governments and administrative authorities policies for restricting international trade. The barriers take many forms which include import and export licenses, import quotas and subsidies, tariffs and non tariff barriers as well as embargoes (Michael & Stephen, 2008). Background of tariffs and trade barriers. The concept of tariffs and trade barriers has been in existence since prehistoric times all over the world.
However, it’s effects came to be strongly felt during the and after the industrial revolution when international businesses control started being dictated by the market forces of demand and supply (Marshall, 2003). With strong social-economic and political impacts to the regions they are constituted in, countries join to form blocks that guide their trade policies. Example, we have North America Free Trade Agreement, European Union and Central America Free Trade Agreement. Reasons for employing use of tariffs and trade barriers
Trade barriers and tariffs are used mostly by the developing economies to protect their infant industries and employments in their countries. Imported goods can threaten the local industries through reduced demand for its products and thus possible closure and loss of jobs. Also, governments may employ restrictions to protect its consumers especially in the cases of harmful products. Developed countries on the other hand, employ restrictions for easier control of the standards of the goods and services getting to their regions.
They also manipulate the non tariff barriers as part of the major preconditions to gain market and monopoly in different areas (Bureau of National Affairs, 2008). Negative impacts of imposing tariffs and trade barriers As seen over a long time, trade barriers have been the core abstractions to world trade as goods and services movement is strongly denied. It induces inefficiency from the firms as they are guaranteed protection from competition internationally (Griffiths & Wall, 2004).
Besides, it may serve to reduce the outsourcing drive and exposure to international trade for the local firms. Availability of raw materials and supply of finished products is greatly compromised hindering the different industries from growth. Consumers are denied the chance of enjoying wide ranges of goods and services from diverse producers that would reduce the prices according to the market forces (Brent, 002). Model by: Brent Radcliffe. Figure 1: Price without influence of barriers. Figure 2: Price under effects of tariffs. Tariffs and modern trade
According to Begg et al, 2003), when viewed in the wake of globalization, the role of tariffs and trade barriers has greatly declined prompting the intervention through world trade organizations to open up the globe for easier and free movement of goods and services. Started as the major cause for the establishment of the free trade areas especially in the developed world, other economies are fast tracking the undertaking for the resultant massive benefits. However, even after understanding the essence of the concept, the free trade zones established are still largely tied to restrictions for participation by non-members states.
Goods acquisition and distribution As a consumer of international raw materials in my industry, accessibility of the materials has been greatly affected. With strong restrictions and hefty tariffs, the cost of production moves up tremendously reducing greatly the ability of my products to compete with others in the market. This results to indirect buying or use of a third party as a supplier through tendering instead of acquiring them directly. Exporting the products on the other hand demands compliance to licenses and non-tariff barriers thereby restricting my products to only a few regions internationally.
Besides, in the regions that the company manages to sell the products, there are great delays that affect the overall efficiency of the company to globally serve the people (Bureau of National Affairs, 2008). World trade organization and trade barriers. It has been very clear that during its establishment after the World War II, the third major objective of the World Trade Organization was to negotiate for reduction of the trade barriers in the member countries. Though it succeeded in drastically reducing the tariffs by the member states, some member states turned to non tariff barriers as a new way of trade barriers.
Currently, the organizations have extended its mandate to prevent countries from using such methods. With highly qualified staff, the decisions are made by the member states whose benefits from the organization are the core requirement. Different countries like US have been counted to benefit greatly from the organization from it operationalization since inception (Marshall, 2003). Conclusion. Tariffs and trade barriers in the international trade act as the main obstacles for development and advancement of the main globalization agenda.
As indicated earlier, the losses to be incurred by an individual state are far greater compared to the gains a country would reap from free trading. Individual industries like ours on the same line suffer even more with impacts being far felt to the grassroots economic application. Thank you all for being so patient with me, explain my arguments to the three or so people who may have not managed to get to this presentation. Thank you.
Reference list: Begg, D. & Fischer, S. & Durnbusch, M. (7th Ed). (2003). Economics. London: Mc Graw- Hill.Brent, R. (2002). Basics of Tariffs and Trade Barriers. Retrieved from > www. investopedia. com/articles/economics/08/tariff-trade-barrier-basics. asp Bureau of National Affairs. (2008). International Trade Reporter. Washington, D. C. Bureau of National Affairs. Griffiths, A. & Wall, S. (10th Ed). (2004). Applied Economics. Harlow: Financial times Prentice Hall. Marshall, C. (2003). Mastering International Trade. Basingtoke: Palgrave Macmillan. Michael, P. T. , & Stephen, C. (2008). Economic Development. New York:Pearson Education.