Trade Barriers Most Commonly Used.

¶ … trade barriers most commonly used.

Of the many types of trade barriers there are that countries use for managing their balance of trade and protecting key industries, three specifically used by many countries are import duties, quotas, and tariffs.

While there have been many efforts to equalize trade between nations and lower barriers, the fact remains that for many nations, their key industries are so critical to their financial stability that government officials feel compelled to continually create a protectionist climate. This is certainly the case in France with the agricultural industry, also with their wine industry, where there are high import duties and tariffs on in-bound food products, so high in fact as to make an import business economically impossible. The U.S. uses many import duties, quotas, and tariffs at times to equalize the balance of trade in a given industry. Throughout the last ten years the quotas on auto imports from Japan and steel from Korea and China are cases in point. Quotas artificially influence the structure of markets and while in the short-term protect industries within the nations enforcing them, create a competitive disadvantage in the long-term as these companies don't have the opportunity to learn from competing more freely in global markets. While most nations' politicians want to protect jobs and manufacturing sectors of their economics, Dr. Michael Porter in much of his work on competitive and comparative advantage illustrates that the best defense from a global standpoint is a strong offense; which translates into the need for countries to allow for global competition in key sectors of their economy so the industries don't become too dependent on government subsidies for survival. Tariffs as well are merely taxes to inflict an economic cost on the trading partner trying to gain access to a protected industry within a nation. Protectionist approaches to using tariffs can protect the most cherished of industries for a nation, Holland for example uses extremely high tariffs to protect is tulip industry, yet in the end the most critical factor to keep in mind is the best protection is a strong ability to compete globally.

In summary, despite many agreements and accords completed to minimize tariffs between nations, going all the way back to 1944 Bretton Woods Agreement completed at the United Nations Monetary and Financial Conference where a global commitment to freer trade was made, there still exists much protectionism in global markets. Only by competing globally daily will highly protected industries become strong enough to survive in the markets they serve.

Name two factors that will increase the demand for labor, and two factors that will increase the supply of labor.

Two factors that will increase the demand for labor is first, a need for greater production due to consumers requiring more of a specific good being produced, and second, the need for greater skills to manage the more complex processes used in the manufacturing of these goods. Factors that increase the supply of labor include immigration, and second, an increase in wages that offset the value of leisure to potential employees.

Both market demand and the need for greater training to fulfill consumer demands act to increase the aggregate demand for labor. In addition, shortage of a specific skill set integral to fulfilling the demand for a specific process or good can greatly increase the demand for a specific type of labor. Take for example the computer-aided design programs that define new homes or custom-built cars; these designers have high levels of labor demand due to their unique skill set. In terms of generating higher levels of labor supply, immigration is by far the greatest potential contributor, specifically in the areas of labor shortage including scientific and engineering professions. The entire H1-B Visa strategy of the U.S. To at first restrict then promote the immigration of scientific, engineering and software professionals is a case in point. The growth in wage rates for difficult-to-replace professions is also driving up training and education in nursing and medicine, in part driven by the demographic bubble occurring in the U.S., in part driven by the high turn-over of nurses who exit the workforce due to retirement. The fact that wages are increasing in these acute shortage areas are also driving up the supply of labor, as workers migrate away from slower-growing professions into these of higher growth with unmet needs for workers. The combined effects of immigration and higher wage rates in those professions with the largest unmet needs drives up the supply of labor significantly.

In summary, both the increase in the supply and demand of labor is being driven by global economics and the unmet needs for specific types of professionals throughout different nations. An example of these professions includes nursing, computer programming and systems analysis, and specific medical fields as well. Wage increases are also forcing a re-distribution of labor from consolidating and shrinking industries to those expanding, in need of new workers.

The bottom line is that globalization is having a pervasive effect both on increasing the demand, supply and distribution of workers to industries where demand for their specific skills is greatest.

Why do our political leaders favor exports of U.S. goods and "buy American" policies?

Politicians continue to advocate exporting U.S. goods and "buy American" programs first due to many of them having large manufacturing bases in their districts and states they represent, and therefore are looking to promote the economic interests of their constituents.

The exporting of American products also reduces the nation's balance of trade in a broader macroeconomic sense, and also leads to a stronger U.S. dollar against other currencies. For those politicians from the "rust belt" states of the U.S. where traditional manufacturing has been hard hit by the migration of manufacturing offshore to China and other Asian nations, the need for keeping jobs alive in their represented districts and states is critical. Illinois, Michigan, Ohio and Pennsylvania form the majority of the rust belt, and in the congressional districts and states the focus on retaining American manufacturing by relaxing export tariffs for certain goods, working globally with foreign nations to reduce their tariffs for U.S.-manufactured goods, all of which percolates down to the fate of the American manufacturing worker and their job.