• Join over 1.2 million students every month
• Accelerate your learning by 29%
• Unlimited access from just £6.99 per month
Page
1. 1
1
2. 2
2
3. 3
3
4. 4
4
5. 5
5
6. 6
6
7. 7
7
8. 8
8
9. 9
9
10. 10
10
11. 11
11
12. 12
12
13. 13
13
14. 14
14
15. 15
15
16. 16
16
17. 17
17
18. 18
18
19. 19
19
20. 20
20
21. 21
21
22. 22
22
23. 23
23
24. 24
24
25. 25
25
26. 26
26
27. 27
27
28. 28
28
29. 29
29
30. 30
30
31. 31
31
32. 32
32
33. 33
33
34. 34
34
35. 35
35
36. 36
36
37. 37
37
38. 38
38

# The establishment of the World Trade Organisation has led to a significant reduction in the level of tariffs applied countries member to the WTO. Nevertheless, there has been a substantial mushrooming of non-tariff measures over the last decade. The latte

Extracts from this document...

Introduction

Middle

= b + d ? e Hence the decline in welfare in U.S. is indeed the algebraic sum of two different terms, the production and consumption distortion loss (b + d), and, the TOT improvement (rectangle e). If the TOT improvement for the U.S. is large enough to outweigh the efficiency losses, then the U.S. is indeed better off at the cost of making Mexico worse off! Of course, if e < b + d, then the U.S welfare falls as well. In Mexico the only change is the lower TOT (the equivalent area of "e" in the graph for Mexico) and that only makes the economy of that country worse off! The tariff by the U.S. has indeed been laid partially on the shoulders of their trade partner. As both U.S. and Mexico are major partners of each other in trade, a lower import demand for clothing by the U.S due to tariff will indeed lower the price of this good for Mexico. This type of policy, on that hurts your trading partner, is called "beggar-thy-neighbor" policy. It upsets the relationship between a country and its trade partner and leads to retaliation by the hurt party. What are the income distribution effects of tariff by the U.S.? These are similar to the previous section. In the U.S., due to Stolper- Samuelson effect, the real income of labor (the scarce factor used intensively in clothing production in the U.S.) rises while that of capital falls. The opposite is true for Mexico where labor loses and capital gains. Note the overall world welfare effect of a tariff: it is always negative! Even if U.S. makes itself better off, at the cost of its neighbor, the net world welfare change is b + d which represent loss of efficiency in the U.S. The relationship between tariff and non-tariff measures As tariffs have generally been subject to more stringent WTO disciplines and reduction commitments than NTMs, some observers have worried that countries might be tempted to replace declining tariff by more non-tariff protection. ...read more.

Conclusion

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Political & International Economics section.

## Found what you're looking for?

• Start learning 29% faster today
• 150,000+ documents available
• Just £6.99 a month

Not the one? Search for your essay title...
• Join over 1.2 million students every month
• Accelerate your learning by 29%
• Unlimited access from just £6.99 per month

# Related University Degree Political & International Economics essays

1. ## Since the initiation of the open door and reform policy, China has experienced the ...

However, the Japanese FDI in China in the aspect of automobile were only 2 projects and the investment value just accounted for 200 million.40 Compared with the automobile FDI from Germany and America, it was obvious that the Japanese investment was behindhand.

2. ## Was the Great Depression successfully overcome in Australia by 1930?

The first major policy step in economic recovery was the introduction of heavy tariffs on overseas imports. Between 1929 and 1933, the general tariff imposed on non-British goods increased by over 70% (Carmody, cited in Meredith et al. 1999, pp.104).

1. ## There are many benefits in free trade yet so many countries erect trade barriers ...

Examples of preferential trading systems are the European Union and the North American Free Trade Association. Participating in free trade can bring a multitude of advantages and disadvantages over a strategic period of time. Free trade exposes several advantages. The first of these benefitial features would be economies of scale.

2. ## An Analysis of Macro-Environmental Factors and Their Impacton ...... Company in Malaysia

However, under the terms of the federation, the two states of Sabah and Sarawak retain certain constitutional distinctions. The cabinet is appointed by the prime minister from among the members of parliament with the consent of the paramount ruler. 2 Pro-business government policies that encourage investment in Malaysia provide a variety of tax incentives.

1. ## What is the fundamental problem of exchange, and how was it solved to permit ...

Furthermore a democratic system of governance that allowed foreign merchants to operate freely and be responsive to the needs of the merchant guilds allowed even more secure trade. The final part of the question asks how important long distance trade was to the prosperity of the Venetian Republic and Portugal.

2. ## The Opium Wars - Causes and Consequences.

efficiency of the military, corruption in the court, many rebellions against various aspects of Chinese culture- caused the greatest disruption in Chinese society that had ever been encountered. 23 Only after a second war and two more treaties did China begin to realize that perhaps the cultural differences between themselves

1. ## Economic growth in China

After 1991, with the rapid economic development and the further reform of the opening-up policy, there was a drastic change in the investment environment in China. Therefore, Japanese FDI in China experienced rapid development not only in the investment scale but also in the investment quality.42 In 1991, the Japanese

2. ## Outline the evolution of E.U. competition policy. Is current policy likely to be successful ...

Whilst perhaps giving grounds for an ex-post ruling, it failed to provide any ex-ante guidance on the legitimacy of a merger. Due to this weakness, Article 86 was used very infrequently, relative to Article 85. A landmark case in competition policy is that of the Continental Can Company, in 1971.

• Over 160,000 pieces
of student written work
• Annotated by
experienced teachers
• Ideas and feedback to