国经济经学课件6

AnIntroductiontoInternationalEconomicsChapter6:NontariffBarriersandthePoliticalEconomyofProtectionismDominickSalvatoreJohnWiley&Sons,Inc.6-1ChenQingpingAnhuiUniversityofFinanceandEconomyAnIntroductiontoInternationNontariffbarrierstotradeThepreviouschapterexploredtheeffectoftariffsasbarrierstointernationaltrade.Thischapterextendsthisdiscussionbyconsideringtheeffectsofbarrierstotradeotherthanthetariffsuchas:QuotasVoluntaryexportrestraints(VERs)RegulationsExportsubsidiesDumping2NontariffbarrierstotradeTheNontariffbarrierstotradeThepreviouschapterexploredtheeffectoftariffsasbarrierstointernationaltrade.Thischapterextendsthisdiscussionbyconsideringtheeffectsofbarrierstotradeotherthanthetariffsuchas:Thegrowthofthesenontariffbarriersisimportantastheyhavegrowninuseinrecentyearsandtheireffectsaretypicallynotastransparentaswithatariff.Thisincreasestheopportunityforhiddenprotectionism.3NontariffbarrierstotradeTheQuotasAquotaisanumericallimitonthenumberofallowedimports.Usingtheexamplefromtariffs,aquotathatreducesimportstothesamenumericalamountasanequivalenttariffchangesthemarketinasimilarwaytothetariff.Quota4QuotasAquotaisanumericallQuotasInitialeffectsofaquotaTheequilibriumpriceunderaquota(thequotaprice)willbethesameasthepricewithanequivalenttariff.Quota5QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaTheequilibriumpriceunderaquota(thequotaprice)willbethesameasthepricewithanequivalenttariff.Thelevelofproductionwillbethesameaswithatariff.QuotaProduction6QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaTheequilibriumpriceunderaquota(thequotaprice)willbethesameasthepricewithanequivalenttariff.Thelevelofproductionwillbethesameaswithatariff.Thelevelofdomesticconsumptionwillbethesameaswithatariff.QuotaConsumption7QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaThelevelofproductionwillbethesameaswithatariff.Thelevelofdomesticconsumptionwillbethesameaswithatariff.Theallocationofthequotarentsdependsonhowthegovernmentallocatesthelicensestoimporttheproduct.QuotaQuotarent8QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaThelevelofdomesticconsumptionwillbethesameaswithatariff.Theallocationofthequotarentsdependsonhowthegovernmentallocatesthelicensestoimporttheproduct.Thesameregionsofdeadweightlossexist.QuotaDeadweightloss9QuotasInitialeffectsofaquoConcernsaboutquotasTheinitialeffectsofatariffandaquotaaresimilar.TheeffectofmarketchangesChangesindomesticsupplyordemandalterimportswithatariff.Sinceimportsarefixedwithaquota,thequantityofimportsdoesnotchangewithmarketchanges.10ConcernsaboutquotasTheinitiConcernsaboutquotasTheinitialeffectsofatariffandaquotaaresimilar.TheeffectofmarketchangesTheeffectofimperfectcompetitionByintroducinganumericallimitonimports,quotaslimitthecompetitionfacedbydomesticproducers.Thisbetterallowsdomesticproducerstoexploittheirmonopolypower.11ConcernsaboutquotasTheinitiConcernsaboutquotasTheinitialeffectsofatariffandaquotaaresimilar.TheeffectofmarketchangesTheeffectofimperfectcompetitionTheallocationofthequotarentsisambiguousIfthegovernmentauctionsoffthelicenses,itshouldcapturethequotarent.Iftheallocationofthequotarentisarbitrary,itispossiblethataportionofthequotarentwillbelosttothesociety.12ConcernsaboutquotasTheinitiVoluntaryexportrestraintsAvoluntaryexportrestraintexistswhentheexportingnationvoluntarilyrestrictsitsexportstoanumericallimit.Generally,thisactionistakentoreducethelikelihoodoftheimportingcountryimposingsomeotherformofbarriertotrade.Thewelfareeffectsaresimilartoquotasbutwiththequotarentgoingtotheforeignproducer.In1981,JapanandtheUSagreedtoaVERof1.68millionautomobilestobeimportedannuallybytheUSfromJapan.13VoluntaryexportrestraintsAvRegulationsHealthandsafetyregulationsmayserveasbarrierstointernationaltradebyraisingthecostsofimportedproductsGovernmentpurchasingrestrictionsmaybebiasedagainstforeigngoodsTheBuyAmericanActof193314RegulationsHealthandsafetyrInternationalcartelsAninternationalcartelmayformtolimitsalesForexample,OPEC(theOrganizationofPetroleumExportingCountries)actstolimitexportsofpetroleum.TheEnergyInformationAdministrationprovidesagoodsummaryofcurrentactivitiesofOPECWWWlink15InternationalcartelsAninternDumpingDumpingexistswhen(1)thesalespriceintheimportingcountryislowerthanthesalespriceintheexportingcountryor(2)thesalespriceintheimportingcountryisbelowthecostsofproduction.TypesofdumpingPersistentSporadicPredatory16DumpingDumpingexistswhen(1)DumpingDumpingexistswhen(1)thesalespriceintheimportingcountryislowerthanthesalespriceintheexportingcountryor(2)thesalespriceintheimportingcountryisbelowthecostsofproduction.TypesofdumpingCountervailingdutyUSinternationaltradelawallowsfortheimpositionofatariff(knownasacountervailingduty)justsufficientraisethedomesticpricetoeithertheforeignpriceortheaveragecostsofproduction.17DumpingDumpingexistswhen(1)ArgumentsforprotectionismFallaciousargument1–“Traderestrictionsareneededtoprotectdomesticlaboragainstcheapforeignlabor.”Thecostoflaborisonlypartiallydeterminedbywages.Greaterproductivitymaymorethanoffsettheadvantagesofferedbylowforeignwages.18ArgumentsforprotectionismFalArgumentsforprotectionismFallaciousargument1–“Traderestrictionsareneededtoprotectdomesticlaboragainstcheapforeignlabor.”Fallaciousargument2–“Scientifictariffsareneededsothatdomesticproducerscancompete.”Ascientifictariffraisesthepriceofimportstothedomesticprice.Thisdoesincreasedomesticproductionbutitalsoeliminatesimports.19ArgumentsforprotectionismFalArgumentsforprotectionismQuestionableargument1–“Traderestrictionsareneededtoreducedomesticunemployment.”Traderestrictionsmayreduceimportsandleadtoanexpansionintheeconomywhichwilllowerunemploymentintheshort-run.Thisconclusionhingesontherebeingnoretaliationbyforeignnations.20ArgumentsforprotectionismQueArgumentsforprotectionismQuestionableargument1–“Traderestrictionsareneededtoreducedomesticunemployment.”Questionableargument2–“Traderestrictionsareneededtocureabalanceofpaymentsdeficit.”Aswiththepreviousargument,traderestrictionsmayhavethiseffectbuttheconclusionhingesonalackofretaliationbyothercountries.21ArgumentsforprotectionismQueArgumentsforprotectionismAqualifiedargument–“Infantindustriesneedtobeprotectedsothattheycanbecomeestablishedindustries.”Anewindustrylikelydoesnothavetheskillsandexperiencetobeasuccessfulcompetitorintheinternationalmarketplace.Togaintheseskillsthefirmmustbeprotectedfromcompetitionforalimitedperiodoftime.QualificationsTheprotectionmustbeoflimitedduration.Aproductionsubsidyisthelowestcosttoolforachievingthisend.22ArgumentsforprotectionismAqStrategictradepolicyOligopolisticmarketssubjecttoexternaleconomiesmaybenefitfromgovernmentintervention.ExamplesSemi-conductorsAircraftproductionThedisputebetweenBoeingandAirbustakentotheWTOin2004isanexampleofsuchpolicy.23StrategictradepolicyOligopolStrategictradepolicyOligopolisticmarketssubjecttoexternaleconomiesmaybenefitfromgovernmentintervention.ConcernsWhichindustriesdoestheargumentapplyto?Canthegovernmentpickwinners?Retaliationinothermarketsmayeliminateanygains.24StrategictradepolicyOligopolThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffActRaisedaverageimportdutiesto59percentby1932Spurredinternationalretaliation25ThehistoryofUScommercialpThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffAct1934–TradeAgreementsActAuthorizedthepresidenttonegotiatemutualtariffreductionsbyasmuchas50percentReductionswerebasedontheprincipleofmostfavorednationThemostfavorednationprincipleextendstoalltradingpartnersanyreciprocaltariffreductionnegotiatedwithanytradingpartner.Forexample,anegotiatedreductionwithCanadawouldextendtoMexicoifithadmostfavorednationstatus.26ThehistoryofUScommercialpThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffAct1934–TradeAgreementsAct1947–TheGeneralAgreementonTariffsandTrade(GATT)TheU.S.joinedthenewlyformedGATT.GATTisdesignedtopromoteexpandedinternationaltradethroughmultilateralnegotiations.27ThehistoryofUScommercialpThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffAct1934–TradeAgreementsAct1947–TheGeneralAgreementonTariffsandTrade(GATT)1950s–MovementsawayfromfreetradePeril-pointprovisionsEscapeclauseNationalsecurityclause28ThehistoryofUScommercialpThehistoryofUScommercialpolicy1947–TheGeneralAgreementonTariffsandTrade(GATT)1950s–Movementsawayfromfreetrade1962–TradePromotionActAuthorizedthepresidenttonegotiateacrosstheboardtariffreductionsofupto50percent.IntroducedTradeAdjustmentAssistance(TAA)toworkersdisplacedbyinternationaltrade.AllowedthepassageoftheKennedyRoundnegotiationoftheGATT.29ThehistoryofUScommercialpThehistoryofUScommercialpolicy1947–TheGeneralAgreementonTariffsandTrade(GATT)1950s–Movementsawayfromfreetrade1962–TradePromotionAct1974–TradeReformActAuthorizedthepresidenttonegotiatetariffreductionsofupto60percentandtheeliminationoftariffsbelow5percent.ContributedtopassageoftheTokyoRoundnegotiationsoftheGATT.30ThehistoryofUScommercialpThehistoryofUScommercialpolicy1950s–Movementsawayfromfreetrade1962–TradePromotionAct1974–TradeReformAct1984–TheTradeandTariffActAuthorizedthepresidenttonegotiateinternationalagreementsfortheprotectionofintellectualpropertyrights.ExtendedthesystembywhichdevelopingnationexportsaregrantedpreferentialaccesstoUSmarkets.31ThehistoryofUScommercialpThehistoryofUScommercialpolicy1950s–Movementsawayfromfreetrade1962–TradePromotionAct1974–TradeReformAct1984–TheTradeandTariffAct1988–OmnibusTradeandCompetitivenessActRequiredtheU.S.SpecialTradeRepresentativetosetarigorousschedulefornegotiatingreductionsintradebarrierswithcountriesmaintaininghighbarrierstoU.S.exports.32ThehistoryofUScommercialpThehistoryofUScommercialpolicy1962–TradePromotionAct1974–TradeReformAct1984–TheTradeandTariffAct1988–OmnibusTradeandCompetitivenessAct1993–TheUruguayRoundTheUruguayRoundofnegotiationsoftheGATTwascompletedinDecember1993.Giventhewiderangingimplicationsofthisroundofnegotiations,itwillbeconsideredindetail.33ThehistoryofUScommercialpTheUruguayRoundEighthroundofnegotiationsfortheGATT123nationsparticipatedinthenegotiationsTheagreementtookeffectonJuly1,199534TheUruguayRoundEighthroundProvisionsoftheUruguayRoundTariffsTariffsonindustrialproductsfallsfromanaverageof4.7percenttoanaverageof3percent.Theshareofgoodwithzerotariffsincreasesfrom20-22percentto40-45percent.Tariffsremovedonpharmaceuticals,constructionsequipment,medicalequipment,paperproducts,andsteel.35ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundTariffsQuotasQuotasonagriculturalproductsweretobereplacedwithlessrestrictivetariffsby1999Quotasontextilesweretobereplacedwithlessrestrictivetariffsby200436ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundTariffsQuotasAntidumpingTheuseofcountervailingdutiesisnoteliminatedbutanewdisputeresolutionmechanismsareputinplace.37ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundTariffsQuotasAntidumpingSubsidiesThevolumeofsubsidizedagriculturalproductswastobereducedby21percentby1999.Governmentsubsidiesforindustrialresearchwerelimitedto50percentoftheappliedresearchcost.38ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundQuotasAntidumpingSubsidiesSafeguardsCountriesarebarredfromimplementinghealthandsafetystandardsthatarenotbasedonscientificresearch.Temporarytariffsareallowedtoprotectdomesticindustriesfromtemporaryimportssurges.39ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundQuotasAntidumpingSubsidiesSafeguardsIntellectualpropertyTheagreementcallsfor20yearprotectionofpatents,trademarks,andcopyrights.A10yearphase-inperiodisallowedforpatentsoverpharmaceuticalsindevelopingcountries.40ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundQuotasAntidumpingSubsidiesSafeguardsIntellectualpropertyServicesBankingandsecuritymarketsinJapanandSouthKoreawereopenedtoU.S.firms.41ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundAntidumpingSubsidiesSafeguardsIntellectualpropertyServicesTraderelatedinvestmentmeasuresPhasesouttherequirementthatforeigninvestorsbuysupplieslocallyorexportasmuchastheyimport42ProvisionsoftheUruguayRounProvisionsoftheUruguayRoundSafeguardsIntellectualpropertyServicesTraderelatedinvestmentmeasuresWorldTradeOrganizationEstablishedtheWorldTradeOrganizationinplaceoftheGATTSecretariat.Allowsformoreexpeditiousresolutiontradedisputes43ProvisionsoftheUruguayRounContinuedhistoryofUScommercialpolicy1974–TradeReformAct1984–TheTradeandTariffAct1988–OmnibusTradeandCompetitivenessAct1993–TheUruguayRound2002–TradepromotionauthoritygrantedPresidentBushAllowsthepresidenttonegotiatetradeagreementsthatmaynotbeamendedbyCongress,onlyratifiedorrejected.44ContinuedhistoryofUScommerContinuedhistoryofUScommercialpolicy1974–TradeReformAct1984–TheTradeandTariffAct1988–OmnibusTradeandCompetitivenessAct1993–TheUruguayRound2002–TradepromotionauthoritygrantedPresidentBushOn-going–DoharoundnegotiationsThecurrentroundofnegotiationsforextendingtheGATTiscurrentlyon-going.45ContinuedhistoryofUScommerIssuesconfrontingtheDoharoundExistingon-goingtradedisputesU.S.taxbreaksonincomeearnedfromexportsSubsidiestoaircraftmakers(BoeingandAirbus)EUbansongeneticallymodifiedfoodTheuseofanti-dumpingregulations46IssuesconfrontingtheDoharoIssuesconfrontingtheDoharoundExistingon-goingtradedisputesDevelopedworldagriculturalpoliciesTariffsandsubsidiesonagriculturalproductsmakedevelopingworldentryintothesemarketsdifficult47IssuesconfrontingtheDoharoIssuesconfrontingtheDoharoundExistingon-goingtradedisputesDevelopedworldagriculturalpoliciesThedevelopmentofregionaltradegroupsthatundermineeffortsofglobaltradeexpansion48IssuesconfrontingtheDoharoIssuesconfrontingtheDoharoundExistingon-goingtradedisputesDevelopedworldagriculturalpoliciesThedevelopmentofregionaltradegroupsthatundermineeffortsofglobaltradeexpansionCallsforuniformlaborandenvironmentalstandards49IssuesconfrontingtheDoharoIssuesconfrontingtheDoharoundExistingon-goingtradedisputesDevelopedworldagriculturalpoliciesThedevelopmentofregionaltradegroupsthatundermineeffortsofglobaltradeexpansionCallsforuniformlaborandenvironmentalstandardsExpansionoftheGATTintoissuesrelatedtoinvestmentEliminationoflocalcontentrules50IssuesconfrontingtheDoharoAnIntroductiontoInternationalEconomicsChapter6:NontariffBarriersandthePoliticalEconomyofProtectionismDominickSalvatoreJohnWiley&Sons,Inc.6-51ChenQingpingAnhuiUniversityofFinanceandEconomyAnIntroductiontoInternationNontariffbarrierstotradeThepreviouschapterexploredtheeffectoftariffsasbarrierstointernationaltrade.Thischapterextendsthisdiscussionbyconsideringtheeffectsofbarrierstotradeotherthanthetariffsuchas:QuotasVoluntaryexportrestraints(VERs)RegulationsExportsubsidiesDumping52NontariffbarrierstotradeTheNontariffbarrierstotradeThepreviouschapterexploredtheeffectoftariffsasbarrierstointernationaltrade.Thischapterextendsthisdiscussionbyconsideringtheeffectsofbarrierstotradeotherthanthetariffsuchas:Thegrowthofthesenontariffbarriersisimportantastheyhavegrowninuseinrecentyearsandtheireffectsaretypicallynotastransparentaswithatariff.Thisincreasestheopportunityforhiddenprotectionism.53NontariffbarrierstotradeTheQuotasAquotaisanumericallimitonthenumberofallowedimports.Usingtheexamplefromtariffs,aquotathatreducesimportstothesamenumericalamountasanequivalenttariffchangesthemarketinasimilarwaytothetariff.Quota54QuotasAquotaisanumericallQuotasInitialeffectsofaquotaTheequilibriumpriceunderaquota(thequotaprice)willbethesameasthepricewithanequivalenttariff.Quota55QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaTheequilibriumpriceunderaquota(thequotaprice)willbethesameasthepricewithanequivalenttariff.Thelevelofproductionwillbethesameaswithatariff.QuotaProduction56QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaTheequilibriumpriceunderaquota(thequotaprice)willbethesameasthepricewithanequivalenttariff.Thelevelofproductionwillbethesameaswithatariff.Thelevelofdomesticconsumptionwillbethesameaswithatariff.QuotaConsumption57QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaThelevelofproductionwillbethesameaswithatariff.Thelevelofdomesticconsumptionwillbethesameaswithatariff.Theallocationofthequotarentsdependsonhowthegovernmentallocatesthelicensestoimporttheproduct.QuotaQuotarent58QuotasInitialeffectsofaquoQuotasInitialeffectsofaquotaThelevelofdomesticconsumptionwillbethesameaswithatariff.Theallocationofthequotarentsdependsonhowthegovernmentallocatesthelicensestoimporttheproduct.Thesameregionsofdeadweightlossexist.QuotaDeadweightloss59QuotasInitialeffectsofaquoConcernsaboutquotasTheinitialeffectsofatariffandaquotaaresimilar.TheeffectofmarketchangesChangesindomesticsupplyordemandalterimportswithatariff.Sinceimportsarefixedwithaquota,thequantityofimportsdoesnotchangewithmarketchanges.60ConcernsaboutquotasTheinitiConcernsaboutquotasTheinitialeffectsofatariffandaquotaaresimilar.TheeffectofmarketchangesTheeffectofimperfectcompetitionByintroducinganumericallimitonimports,quotaslimitthecompetitionfacedbydomesticproducers.Thisbetterallowsdomesticproducerstoexploittheirmonopolypower.61ConcernsaboutquotasTheinitiConcernsaboutquotasTheinitialeffectsofatariffandaquotaaresimilar.TheeffectofmarketchangesTheeffectofimperfectcompetitionTheallocationofthequotarentsisambiguousIfthegovernmentauctionsoffthelicenses,itshouldcapturethequotarent.Iftheallocationofthequotarentisarbitrary,itispossiblethataportionofthequotarentwillbelosttothesociety.62ConcernsaboutquotasTheinitiVoluntaryexportrestraintsAvoluntaryexportrestraintexistswhentheexportingnationvoluntarilyrestrictsitsexportstoanumericallimit.Generally,thisactionistakentoreducethelikelihoodoftheimportingcountryimposingsomeotherformofbarriertotrade.Thewelfareeffectsaresimilartoquotasbutwiththequotarentgoingtotheforeignproducer.In1981,JapanandtheUSagreedtoaVERof1.68millionautomobilestobeimportedannuallybytheUSfromJapan.63VoluntaryexportrestraintsAvRegulationsHealthandsafetyregulationsmayserveasbarrierstointernationaltradebyraisingthecostsofimportedproductsGovernmentpurchasingrestrictionsmaybebiasedagainstforeigngoodsTheBuyAmericanActof193364RegulationsHealthandsafetyrInternationalcartelsAninternationalcartelmayformtolimitsalesForexample,OPEC(theOrganizationofPetroleumExportingCountries)actstolimitexportsofpetroleum.TheEnergyInformationAdministrationprovidesagoodsummaryofcurrentactivitiesofOPECWWWlink65InternationalcartelsAninternDumpingDumpingexistswhen(1)thesalespriceintheimportingcountryislowerthanthesalespriceintheexportingcountryor(2)thesalespriceintheimportingcountryisbelowthecostsofproduction.TypesofdumpingPersistentSporadicPredatory66DumpingDumpingexistswhen(1)DumpingDumpingexistswhen(1)thesalespriceintheimportingcountryislowerthanthesalespriceintheexportingcountryor(2)thesalespriceintheimportingcountryisbelowthecostsofproduction.TypesofdumpingCountervailingdutyUSinternationaltradelawallowsfortheimpositionofatariff(knownasacountervailingduty)justsufficientraisethedomesticpricetoeithertheforeignpriceortheaveragecostsofproduction.67DumpingDumpingexistswhen(1)ArgumentsforprotectionismFallaciousargument1–“Traderestrictionsareneededtoprotectdomesticlaboragainstcheapforeignlabor.”Thecostoflaborisonlypartiallydeterminedbywages.Greaterproductivitymaymorethanoffsettheadvantagesofferedbylowforeignwages.68ArgumentsforprotectionismFalArgumentsforprotectionismFallaciousargument1–“Traderestrictionsareneededtoprotectdomesticlaboragainstcheapforeignlabor.”Fallaciousargument2–“Scientifictariffsareneededsothatdomesticproducerscancompete.”Ascientifictariffraisesthepriceofimportstothedomesticprice.Thisdoesincreasedomesticproductionbutitalsoeliminatesimports.69ArgumentsforprotectionismFalArgumentsforprotectionismQuestionableargument1–“Traderestrictionsareneededtoreducedomesticunemployment.”Traderestrictionsmayreduceimportsandleadtoanexpansionintheeconomywhichwilllowerunemploymentintheshort-run.Thisconclusionhingesontherebeingnoretaliationbyforeignnations.70ArgumentsforprotectionismQueArgumentsforprotectionismQuestionableargument1–“Traderestrictionsareneededtoreducedomesticunemployment.”Questionableargument2–“Traderestrictionsareneededtocureabalanceofpaymentsdeficit.”Aswiththepreviousargument,traderestrictionsmayhavethiseffectbuttheconclusionhingesonalackofretaliationbyothercountries.71ArgumentsforprotectionismQueArgumentsforprotectionismAqualifiedargument–“Infantindustriesneedtobeprotectedsothattheycanbecomeestablishedindustries.”Anewindustrylikelydoesnothavetheskillsandexperiencetobeasuccessfulcompetitorintheinternationalmarketplace.Togaintheseskillsthefirmmustbeprotectedfromcompetitionforalimitedperiodoftime.QualificationsTheprotectionmustbeoflimitedduration.Aproductionsubsidyisthelowestcosttoolforachievingthisend.72ArgumentsforprotectionismAqStrategictradepolicyOligopolisticmarketssubjecttoexternaleconomiesmaybenefitfromgovernmentintervention.ExamplesSemi-conductorsAircraftproductionThedisputebetweenBoeingandAirbustakentotheWTOin2004isanexampleofsuchpolicy.73StrategictradepolicyOligopolStrategictradepolicyOligopolisticmarketssubjecttoexternaleconomiesmaybenefitfromgovernmentintervention.ConcernsWhichindustriesdoestheargumentapplyto?Canthegovernmentpickwinners?Retaliationinothermarketsmayeliminateanygains.74StrategictradepolicyOligopolThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffActRaisedaverageimportdutiesto59percentby1932Spurredinternationalretaliation75ThehistoryofUScommercialpThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffAct1934–TradeAgreementsActAuthorizedthepresidenttonegotiatemutualtariffreductionsbyasmuchas50percentReductionswerebasedontheprincipleofmostfavorednationThemostfavorednationprincipleextendstoalltradingpartnersanyreciprocaltariffreductionnegotiatedwithanytradingpartner.Forexample,anegotiatedreductionwithCanadawouldextendtoMexicoifithadmostfavorednationstatus.76ThehistoryofUScommercialpThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffAct1934–TradeAgreementsAct1947–TheGeneralAgreementonTariffsandTrade(GATT)TheU.S.joinedthenewlyformedGATT.GATTisdesignedtopromoteexpandedinternationaltradethroughmultilateralnegotiations.77ThehistoryofUScommercialpThehistoryofUScommercialpolicy1930–Smoot-HawleyTariffAct1934–TradeAgreementsAct1947–TheGeneralAgreementonTariffsandTrade(GATT)1950s–MovementsawayfromfreetradePeril-pointprovisionsEscapeclauseNationalsecurityclause78ThehistoryofUScommercialpThehistoryofUScommercialpolicy1947–TheGeneralAgreementonTariffsandTrade(GATT)1950s–Movementsawayfromfreetrade1962–TradePromotionActAuthorizedthepresidenttonegotiateacrosstheboardtariffreductionsofupto50percent.IntroducedTradeAdjustmentAssistance(TAA)toworkersdisplacedbyinternationaltrade.AllowedthepassageoftheKennedyRoundnegotiationoftheGATT.79ThehistoryofUScommercialpThehistoryofUScommercialpolicy1947–TheGeneralAgreementonTariffsandTrade(GATT)1950s–Movementsawayfromfreetrade1962–TradePromotionAct1974–TradeReformActAuthorizedthepresidenttonegotiatetariffreductionsofupto60percentandtheeliminationoftariffsbelow5percent.ContributedtopassageoftheTokyoRoundnegotiationsoftheGATT.80ThehistoryofUScommercialpThehistoryofUScommercial