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Key Term: Non-Tariff

Essay by Bradley Click  •  May 6, 2019  •  Case Study  •  1,159 Words (5 Pages)  •  23 Views

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  1. Key Term and Why You Are Interested in It (100 words minimum)

After reading the textbook, specifically state why you are interested in conducting further research on this key term (e.g., academic curiosity, application to a current issue related to employment, or any other professional rationale). Include a substantive reason, not simply a phrase.

The reason that I am interested in non-tariff barriers is because I truly want to understand the laws that provide accountability to foreign manufacturers or developers.  Right now, the Trump administration is attempting to change the non-tariff barriers that exist currently on international trade to be stricter on the country of China. After reading several articles about the negotiations that are going on between China and the United States concerning non-tariff barriers, my interest was peaked and I decided that I should do more research. Especially involving the laws and policies in place for products that cross the border from Chinese manufacturers. As I have come to find, these negotiations between our current administration and the China government is essential to future success for international trade.

  1. Explanation of the Key Term (100 words minimum)

Satterlee (2018) explains non-tariff barriers as “laws or regulations affecting trade including barriers that governments use (e.g. quotas, embargos, sanctions, levies) to ensure accountability and quality.” (p. 164). One of those barriers is called an embargo. An embargo is a politically driven government order that restricts the trade of products from a certain country. (Fandl, 2017). Sanctions are another avenue that the government can use in their desire for non-tariff barriers. A sanction is, “a commercial or financial penalty that can be applied to a country for its’ failure to uphold democracy or other various political reasons.” (Pedersen, 2008). There are many different non-tariff barriers but these are the most popular of the group. The purpose of these “barriers” are to provide a non-physical limitation on the trade of foreign markets in order to enforce political agendas or punish countries that do not follow prior agreements.

  1. Major Article Summary (300 words minimum)

Felbermayr, Steininger, and Yalcin (2017) consider the impact of a protectionist application of economic policy. The article sets out to look at the most popular economic trade policies that have been proposed by the current Presidential administration. As of 2017, the United States was considered a “very open economy.” (Felbermayr, Steininger, and Yalcin, p. 29, 2017). This current presidential administration has admitted that it will be pursing an “America First” government where protectionism will be at the center of government international affairs. Protectionist countries attempt to protect against foreign markets or competitors by the use of non-tariff barriers, subsidies, import quotas, and regular tariffs.

Since the establishing of his presidency in 2016, President Trump has been an advocate for less tariffs and more non-tariff barriers. The first of those non-tariff barriers that is analyzed by the authors of this article is the withdrawal from NAFTA. The only effect that this could have, according to the authors of this article, is the impact of foreign relations with countries who have financial dependency on America. Countries such as Germany who depend on the importation of vehicles to the United States for market stability may destabilize and have the United States to blame. These authors also believe that it is possible that Germany then could mitigate this situation through the use of other countries like Mexico or Canada.

The next of the non-tariff barriers is the introduction of the border tax adjustment by republican United States representatives Paul Ryan and Kevin Brady. This adjustment means that federal tax on corporate profits would decrease from 35% to 20% allowing for there to be more international investments that are subject to a new “Border Tax Adjustment.” Exports from the United States would be tax deductible while imports would be taxed. Encouraging United States products to be sold for a higher price while importation costs would skyrocket. This encourages the “America First” brand.

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