EC120 Lecture Notes - Lecture 23: Eurocopter Ec120 Colibri, Trade Barrier, Free Trade
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Tariffs- taxes on imported goods: generally, most efficient trade barrier. Import quotas- limits on the quantity of imports: slow customers procedures, or institutional delays. Non- tariff barriers can be very inefficient. Protecting infant industries: development of industries that feature learning-by-doing. Earning profits in foreign markets: development of industries that feature learning-by-doing, or economies of scale, or to get into a profitable industry. Protect against low-wage foreign labour: may be equivalent to protecting producer surplus in low-wage industries. Creating domestic jobs: jobs are also created by exports. Dumping: tariffs intended to offset actions by private companies selling too cheap . Countervailing duties: tariffs intended to offset government subsidies in another country. Narrowly directed tariffs: tariffs as political action. International agreements: gatt and wto- rules on trade policies. Regional trade agreements: free trade areas- nafta, ceta, tpp, etc, customers unions- mercosur, common market- eu. In general, trade leads to improvements in total surplus: regional trade agreements both create and divert trade.