Increasing the demand does not necessarily means that there will be innovations. Actually, basic economy tells us that an increase in demand denotes increase in prices. This means that without ample source or supply, a shortage may incur if tax credits will be passed in the federal level. This would yield higher prices. What the government can do now is to increase research and development in the field of production. Rosenbloom noted that solar panels are subsidized in Europe, specifically, in Germany (Giant Retailers, 8/11/08).
Following this success, it might also be better if the government would subsidize the use of solar energy especially in government buildings or public structures as well. In the meantime, if the government would really want to promote solar panels, increase in production would be the best means to lower the costs. This can be possible by having joint ventures or merging with companies in Europe or Japan to collaborate on research and development. The government can also promote exports and limit imports to protect and support the companies that produce solar panels locally.
Rosenbloom mentioned that the cost difference between technologies exists. Solar energy is so far the most efficient generating 25 to 30 cents for a kilowatt hour (Giant Retailers, 8/11/08). Coal generation is only 6 cents while natural gas is around 9 cents according to Reese Tisdale (as quoted from Giant Retailers, 8/11/08). Competition would decrease the cost difference since the demand for electricity will be reduced if renewable energy will be utilized. WTO and Farm Subsidies
In 1948, the United States along with the allied nations signed GATT or General Agreement on Tariffs and Trade which ought to “minimize controls on cross-border economic deals” under the assumption that this would increase prosperity among members (Goldsmith, Chap 14;305). GATT had been a failure but a new organization was constructed known as the World Trade Organization or WTO. It emerged on 1995 with 148 member states. The principle of WTO required members to “bare its markets the same way to every other country” by eliminating quotas on imports (Goldsmith, Chp 14;305).
WTO Rounds such as the Uruguay Round and Doha Round both tackles improvement in the agricultural sector. The main goals were to “reduce tariffs and to expand the coverage of new products and services” (Goldsmith, Chap 14;305). Goldsmith cited four points that weaken the WTO operation. The first concerned the so-called escape clause which gives the country the right to protect an industry that had suffered due to foreign trade. The second is about free trade areas which results to trade preferences violating the principle of “non-discrimination”.
The third factor is the issue surrounding “voluntary restraint agreements” that, although informal, limits exports. Lastly, the existence of non-tariff barriers that blocks imports. Examples of these are import-licensing tactic, preference to local supplier and official product specification. Richard Mills commented that the proposal is “very general” (WTO Moves, 6/2/04). The difference in economies and domestic laws caused disagreements on tariff levels.
Developing Countries argued that the American and European advances were “not adequate to warrant opening their markets” (Once Again, 6/22/07). Becker reports that developing countries, led by Brazil and India, would like to call the poorest nations to reduce protections for their farm sectors (WTO Moves, 6/2/04). Developed countries, such as the United States and European nations, believed that developing countries have “virtually no negotiating flexibility (Once Again, 6/22/07).
In my opinion, the developing countries are persistent since they would like to acquire the best possible deal that would benefit their situation. It should be noted that developing countries felt that they are being or had been exploited by the developed countries. Retaining subsidies while benefiting from trade obviously reflect inequality from their perspective since they cannot employ the same level of agricultural subsidies for themselves. In a sense, developing nations are inflexible but they are willing to compromise provided that they get a proper explanation.
Take for example their suggestion that would still “allow wealthy nations to maintain higher tariffs for some of their most sensitive products” (WTO Moves, 6/2/04). Conclusion The government, despite the movement towards free trade, would always affect the society and economy. The decisions made by the government should always be towards the benefit of the nation. As much as possible the government should address the social and economical needs of the country. In the case of Botswana, providing a stable and honest government is enough to attract investors.
The government efforts to promote renewable energy sources affected the business sector since it has repercussions on their energy consumption and expenses in general. Lastly, differences in interest and economy produce misunderstandings and disagreements in international commerce. Nevertheless, compromise is not impossible if both sides would still be willing to talk and if the circumstances of opening market on developing countries would be considered.
Becker, E. WTO Moves to Revive Talks on Farm Subsidies. New York Times June 2, 2004. Cch Tax Law Editors. US Master Tax Guide. CCH Inc. 2008; 468. Dougherty, C. Once Again, Trade Effort Stumbles on Subsidies. New York Times June 22, 2007. Goldsmith A. A. Business, Government, and Society: the Global Political Economy,3E. Chapter 12 and 14. Nocera, J. Diamonds are Forever in Botswana. New York Times August 9, 2008. Rosenbloom, S. Giant Retailers Look to Sun Energy Savings. New York Times August 11, 2008.