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NSU Safety & Health Regulations Are Troublesome Discussion

 

Reply:

1-Omar, thanks for your contribution to this week’s discussion; your assessments are correct. According to Salvatore (2012), government regulations can act like quotas when restricting imports of U.S. products, not meeting local regulations. Safety and health regulations are particularly troublesome because they protect local producers and support special interest groups, although they may be motivated by genuine social concerns. Disentangling the special interest group from the genuine need for some regulations can be very difficult. International trade is also affected by government procurement policies. Such policies require government agencies to give preference to domestic suppliers up to some stated price percentage. Although this acts like a tariff in raising the price paid for imports, it generates extra revenues to domestic suppliers like a quota.

Salvatore (2012) posits that lowering tariffs, for example, hurts domestic producers, so domestic producers have a stake in maintaining trade barriers. On the other hand, consumers gain from cheaper imports and gain more than producers lose, so on that basis, we should hear more voices favoring trade because there are more consumers than producers., There are more consumers than producers; however, the gains from trade are divided over many consumers, while the losses are divided over a few producers. Thus, each consumer has some small gain from trade and may not even be aware of the gains they receive from trade. How many consumers know that their automobile, domestic (made with foreign parts) or foreign, is considerably cheaper and better made because of imports?. On the other hand, producers each bear a considerable cost from trade, even though all the costs for producers are less than all the consumers’ gains. Also, it is more likely that producers will be aware that trade has produced the losses, for they visibly compete with imports as part of their daily business.

Salvatore (2012) further argues that individual consumers will have little incentive to organize and lobby for free trade. However, it is in their collective interest, while producers will have considerable incentive to organize and lobby for protection.

There are some arguments for protection that may have some merit. One of these is the infant industry argument. The argument is that protection is necessary for a domestic industry to develop a true comparative advantage. Once a comparative advantage is gained, then a tariff (or another form of protection) will no longer be necessary. The permanent gains to the industry will compensate for the temporary losses to consumers caused by the tariff. Why do significant segments of the public think that domestic markets should be protected?

Reference 

Salvatore, D. (2012). Introduction to International Economics. 3rd Edition. John Wiley & Sons, Inc.

2-Hello Class!

Simply put, quotas are limits set on numbers and amounts. In reference to international trade, quotas are limits on the number of import and exports. Tariff-rate quotes TRQ apply to imports of products. The tariff rate is duty-free inside the quota but a lot higher on the outside. In spite of the fact that it is not difficult to import outside a tax share, the tariff rate could be high to such an extent that it is unrewarding (Fuller & Kennedy, 2019). Tarif quotas are a trade off. Partially, they shield domestic producers from confronting rivalry from huge amounts of imports. In the same sense, they permit exporters some admittance to the market. They additionally permit customers and different makers in the bringing in nation to get hold of certain imports.

Imports of sugar into the United States are administered by TRQ, which permit a specific amount of sugar to enter the nation under a low tax. Import limitations are planned to meet U.S. duties under the NAFTA and the WTO. Boundaries to imports of sugar have been utilized almost since the republic’s establishing; a duty on the item was first passed in 1789 (Schmitz & Lewis, 2015). One of the program’s fundamental designs is to guarantee least value levels for sugar that are commonly altogether higher than those found on global business sectors, prompting greater expenses for U.S. buyers. Thus, the central government is, basically, the pioneer of a cross country sugar cartel.  

On account of the differential between the domestic price and world sugar prices, the United States had encountered a surge of new mixed sugar items and, therefore, huge increments in specific sorts of products containing sugar. A study by Wilson & Countryman, 2019) discovered that Secretary of Agriculture had discovered that these imports would dislodge homegrown sugar-containing items in the commercial center, lessen request in the United States for locally created stick and beet sugar, and lower the market costs for crude and refined sugar beneath the advance rate which upheld the homegrown cost. Having made this assurance and confronted with the inevitable danger of enormous and expensive relinquishments by sugar makers under the credit program, the Secretary of Agriculture was legally necessary to answer to the President that these imports would meddle with the non-plan of action advance program. Having been so exhorted, the President concurred with these discoveries and likewise was required to take action to impose emergency quotas on these items.

Reference:

Fuller, K., & Kennedy, P. L. (2019). A DETERMINATION OF FACTORS INFLUENCING SUGAR TRADE. International Journal of Food and Agricultural Economics, 7(1), 19-29. Retrieved from https://search.proquest.com/docview/2183015612?acc…

Schmitz, T. G., & Lewis, K. E. (2015). Impact of NAFTA on U.S. and mexican sugar markets. Journal of Agricultural and Resource Economics, 40(3), 387-404. Retrieved from https://search.proquest.com/docview/1724875662?acc…

Wilson, S., & Countryman, A. M. (2019). Not so sweet: Economic implications of restricting U.S. sugar imports from mexico. Journal of Agricultural and Applied Economics, 51(3), 368-384. doi:http://dx.doi.org/10.1017/aae.2019.1

3-Hi Professor and classmates,

The United States is one of the largest sugar producer and consumer in the world. The sugar industry has been protected since 1789 when Congress enacted the first tariff against foreign-produced sugar. Since then, the U.S. government has continued to provide trade support and protection for its domestic sugar industry. The United States government imposed a tariff-rate quotas (TQRs) on sugar imports allowed from any U.S border. The idea is to stimulate local sugar producers and better the US sugar production. The last agreement was signed back in 1981 and is known as the Farm Act. TRQs apply to imports of raw cane sugar, refined sugar, sugar syrups, specialty sugars and sugar-containing products. Import restrictions are intended to meet U.S. commitments under the North American Free Trade Agreement (NAFTA) and the Uruguay Round Agreement on Agriculture (which resulted in the creation of the World Trade Organization). The basic in-quota tariff is 1.4606 cents per kilogram (0.663 cents per pound) for raw sugar and 3.6606 cents per kilogram (1.660 cents per pound) for refined sugar. Researchers have learned that the sugar import quota system objective was to increase the price of sugar in the US impacting the sugar world price. As consequence, the US sugar producers gain from this program, but US consumers of sugar like Coke, Pepsi, and Hershey’s paid the price. People argue that this strategy impacts the sugar market and it makes it inefficient. In the contrary, Economists believe that trade is beneficial to both buyers and sellers. Dominick-Salvatore examined how a large nation can increase its welfare over the free trade position by imposing a so-called optimum tariff. However, since the gains of the nation come at the expense of other nations, the latter are likely to retaliate, and in the end all nations usually lose. The tariff and quotas conversation are very controversial topic world since many nations do not always come into an agreement like in the Doha global meeting. In my opinion, sometimes it is better to have a one of one session between nations that can agree like the US, Canada, and Mexico (NAFTA) consensus.  

Reference

USDA (2021). Sugar Import Program. USDA Foreign Agricultural Service. https://www.fas.usda.gov/programs/sugar-import-program.

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