Trade Policies: Beyond Free Trade Flashcards
(19 cards)
government roles
protect property rights, provide public goods, referee to stop cheating
3 questions about trade barriers
- are the benefits > costs?
- should gov’t protect groups when trade is unfair?
- when should gov’t expand its role?
trade is done when both sides will __________!
benefit
relationship btwn exports & imports
exports = cost of imports
revenue tariff
low percentage to raise $ for the fed gov’t
protection tariff
high percentage to force Americans to buy domestic products
quota
restricts # of imports, forcing more domestic purchases
standard
US gov’t demands that imports be made w/ higher wages, environmentally-friendly methods, safe factories, pass certain tests
export subsidies
gov’t pays exporter per item or pays for land, building, etc, lowering costs for the exporter
NAFTA
- US, Canada, Mexico
- reduced trade barriers (1994)
- caused lower prices and higher standard of living
EU
- eliminated barriers to movement of g/s, people, and money
- single currency: euro
- Brexit
WTO
(World Trade Organization)
- began w/ GATT (general agreement on tariffs + trade) after WWII to encourage trade & avoid war
- became WTO in 1994: lower barriers, protect intellectual property & settle disputes
what trade is an antidote to
poverty & war
arguments for trade barriers
- cheap foreign labor hurts US jobs
- environment-damaging foreign manufacturing
- US needs to make own weapons (strategic industries)
- protect infant industries
- diversify goods we produce (prevent overdependence on one product)
- get even w/ nations restricting US products
arguments for free trade
- US tech gives workers productivity advantage
- poor nations will be better environmentally as they gain wealth
- our imports help foreign jobs
- retaliation leads to retaliation
- prices ↓, choices ↑, quality ↑, freedom ↑
opinion of Francis Schaeffer
ppl voluntarily give up some of our freedoms for promise of gov’t protection
ISA (income share agreement)
matches a college student with an investor: pay for college as % of incomes until certain # of months held in job
protectionist economists
advocate for strong use of trade policies & barriers to protect domestic industries + workers from unfair international competition
transaction costs
associated w/ purchase of g/s, eg cost of locating buyers/sellers, negotiating terms of exchange, ensuring procedures
