Protectionist Trade Policies

Tariff and Nontariff Barriers The dawn of globalization and the advancement of transport and communication technology have resulted in increased international trade. As a result, various multinational companies (MNCs) such as General Motors, Coca Cola, and Toyota have expanded their international activities. Because of the stiff competition that local producers face, various governments have embraced protectionist policies with the aim regulating international trade. For instance, the U.S.

government imposed quotas on sugar imports in 1982 as part of its interventions in the sugar industry while Japan began restricting automobile exports to the U.S. In 1981 (Batten & Szilagyi, 2011). With increased calls for liberalism fueled by capitalist states, various trade restrictions have been scrapped off to facilitate international trade. This essay analyzes tariff and non-tariff barriers as protectionism policies adopted by various countries. Tariff Barriers Tariffs refer to taxes that are imposed on governments on commodities with the aim of controlling economic activities.

Tariff barriers are very important because they help in protecting industries from international competition (Heetkamp & Tusveld, 2011). Increased international trade flows have resulted into the near collapse or collapse of local industries. This occurs because of the importation of cheap products that compete with local products in what is commonly referred to as dumping. As such, governments impose tariff barriers to protect budding local industries from stiff competition. Tariffs are also taxed to generate revenue. Taxation is one of the main methods that governments use when collecting its revenues.

As such, tariffs imposed on imported goods provide good sources of revenue that can be used to sponsor development projects such as the construction of schools and health centers. Tariff-rate quotas are also excellent forms of tariff barriers to international trade. Quotas normally involve government restrictions on the quality of commodities that are imported into the state. Tariff-rate quotas set a low tariff for imports of a fixed quantity of a given product and a higher tariff for any imports of the same product that exceed the set quantity (Hanson, 2010).

As such, tariff-rate quotas embrace both tariff taxes and quotas. For instance, the United States has set tariff-rate quotas for sugar, beef, dairy products, and peanuts. The initial tariff rate is normally low while the over-quota tariff is normally prohibitive. Explicit import quotas are frequent in the trade of agricultural goods. They normally allow governments to limit the quantity of imports of a given agricultural product and thus plan on a certain import quantity when setting domestic commodity programs (Batten & Szilagyi, 2011).

Tariffs may also be imposed on commodities in order to work against trade rule violations made by other states. Lower tariffs thus serve to stimulate competition, trade, and reduction of commodity prices. Non-tariff Barriers Non-tariff barriers were adopted for international trade in the 1980s (Heetkamp & Tusveld, 2011). Therefore, non-tariff barriers are protectionist trade policies embraced by countries that restrict imports, but not in the form of tariffs. Non-tariff barriers include countervailing duties, preferences for domestic bidders in government procurements, complex language requirements on commodity packaging and anti-dumping measures.

Hanson (2010) defines non-tariff barriers as trade measures or policies (other than tariffs) used to prohibit or restrict imports by favoring domestic suppliers over foreign suppliers. Non-tariff barriers include packaging and labeling requirements, voluntary export restraints, non-automatic import authorizations, variable import levies, and trade restraints under the multifiber arrangement (Hanson, 2010). Voluntary export restraints are agreements between an importing and an exporting state. They limit the maximum quantity of exports in either quantity or value terms to be sold within a stated period.

However, multifiber Agreements allow special rules to dictate or govern trade in apparel and textiles (Batten & Szilagyi, 2011). Non-automatic authorizations refer to non-tariff barriers where endorsements to import are not granted automatically or freely. For instance, an importer may be obliged to meet some conditions like the required purchases of a domestic product and minimum export performance. Alternatively, the importer's government must approve a given import. This is common when administering quantitative limits.

For instance, the American government stipulates that a domestic steel user can request authorization to surpass the maximum import limitation of steel imports if the product is inaccessible domestically at a rational cost (Batten & Szilagyi, 2011). Variable import levies are special charges that are set to equalize the price of importing a given product with a domestic target price. The levies keep on changing to reflect world prices.

Analysis between tariff and nontariff barriers Whereas tariff taxes are essential to generate revenue and protect local industries from international competition, they have numerous setbacks. Evidently, tariffs increase the economic cost for domestic consumers who have to pay higher prices to import competing goods. As such, tariff taxes are an economic burden on consumers who have to shoulder the tax. Secondly, tariffs also serve to burden the economy through the wasteful allocation of resources to the import competing domestic industry.

This necessitates the numerous negotiations under the General Agreement on Tariffs Trade to lower tariffs on manufactured goods (Hanson, 2010). Heetkamp and Tusveld, (2011) showed that tariff and non-tariff barriers imposed on pharmaceutical products increase the cost of pharmaceuticals and limits access to essential drugs targeting the poor. As such, minimizing tariffs on certain commodities such as drugs increases the private and public sectors purchasing power. This later increases the availability and affordability of essential drugs (Heetkamp & Tusveld, 2011). Non-tariff barriers are often discriminating policies.

This is because states normally impose them on imports of a certain commodity in a given country, but not on imports of the same commodity from another state. As such, non-tariff barriers often serve to restrict the importation of certain imports based on their country of origin. In fact, exports from Third World Countries to industrialized countries are affected by non-tariff barriers largely than trade among industrialized nations. This often widens the gap between developing countries and developed countries, thus propagating global inequality.

In addition, agricultural products are largely affected by non-tariff barriers. This also propagates global inequality because.