TOPIC: FOR GRADE 9B IGCSE
" Trade protection could correct a balance of trade in goods and services deficit".
Time Duration for submitting the Article is
April 15 to 21, 2013
Girls should write against the motion
and
Boys should write in the favour of motion.
Write your opinion here in 500 Words. [20 Marks]
"Marks allocation will be in accordance to the Rubrics"
Note: I will give zero if your writing are not in accordance to the rubrics mentioned by me.
Globalization create an economic conflict in some country, this will make developed country fear if import is cheaper than will lose jobs in their country. Lose jobs create low production which make low income, while low production will not give economic growth which is needed. In this case government makes a trade barrier to protect the firms and jobs in their economic. There are 4 different types of trade barriers which are Tariffs, Subsidies, Quotas, and Embargo. Tariffs are indirect taxes on price of imported goods to make people demand less imported product. Subsidies are grants to help the domestic producer to sell their products in lower price. Quotas are a limit number of imported goods, and embargo is a ban in particular and important goods. Trade barrier can make an effect to the balance of trade in goods and services. Balance of trade is the difference between export and import of certain time.
ReplyDeleteTrade Barriers help government to control the economics of their country, with trade barrier we try to help local company to produce more and increase export. Tariffs help government make the imported product is expensive and less people demand for that product. This help local company to get more demand because the price is cheaper compare to the import product.
Subsidies help to make the balance of trade to not be deficit by give grants to some company. Subsidies give grants and the company will sell the price with lower price which actually make people want to buy the product because it’s cheaper. Quotas also help to make the balance of trade not deficit by limitation the number of import product, the import product will be limited and people buy the local product and increase export. Embargo ban the harmful product to increase life expectancy which help also to decrease the number of imported product and correct the balance of trade.
On the other hand, Trade barrier will cause an effect to the country. People can’t buy goods and services they want, they will go abroad and buy the products. In this case consumer needs to pay more money to get that product. However, Government also make consumer pay more when there is Tariffs which increase the price of import goods by tax. Increase trade barrier will make no trade activity which reduce the importer jobs and create unemployment.
Low unemployment is one of government aims in this case government will not meet their aims to have low unemployment. Moreover trade barrier will make bad relationship between countries because import is decrease and the other countries not get money. Bad relationship will make a war and it’s dangerous for the people who live there
In conclusion trade barrier could correct the balance of trade because the export increase and reduce the import. It increase the export buy give subsidy and tariffs which make the import products is more expensive and embargo ban the harmful product to increase life expectancy. And then it will make economic growth due to the increasing number of export goods and services which will make more revenue for government and the revenue can be use to build the country. Balance of trade measures the different between export and import if the export more high it will give positive amount of balance of trade and will not make deficit.
Trade involves exchanging goods with other countries or nation. With trade, consumer have wider variety choice of goods and services to purchase. Trade can be in physical form or in a form of services, known as visible trade and invisible trade. Example of visible trade are goods such as automobile, and example of invisible trade is tourism. When a country purchase goods and services from other country, they are doing imports, while on the other hand, selling goods and services to other country, its action is known as exports. Trade imbalance may occur when there are trading activity takes place. Balance of trade can be calculated by subtracting both visible and invisible export with both visible and invisible import. From this calculation we can find out whether the country is experiencing a trade deficit or trade surplus. When a county’s export is higher than its imports, therefore the country have a trade surplus. On the contrary, when a country’s import is higher than its export, that country have a trade deficit.
ReplyDeleteTo overcome trade deficit, government can protect trade by applying protectionism policies for the imports. The reason for trade deficit is that import is higher than export, government will apply strategy to help booting its country’s export to correct the trade imbalance. Government impose tariffs to imported goods making import goods expensive to buy and purchase. This helps domestic firms to compete against international firms in terms of price since price of the imported goods are more expensive than domestic. This may help to prevent from people buying imported goods. Overall import will go down since its demand is not really high. Aside of applying trade, government can impose import quota on goods to control the level of imports and help domestic firms to compete with other international firms. This also gives nationalism because their people use more domestic goods as it can cause shift in culture. These protection can help in correcting trade deficit as government have control in level of imports.
However, applying policies such as quota may increase level of smuggling and black markets. They don’t import goods legally to the country by avoiding tax and government will have less tax revenue. With quota and tariffs, not all people in the country can purchase those goods and services, only the rich can purchase the goods and services because it is too expensive for the other and may cause discrimination between them. Exchange of technology for instance will become less and may cause them to be left behind by the fast developing technology. Not all domestic firms in LEDC country have the technology and can provide the same level of goods and services to their people.
In conclusion, trade protection can help to fix trade imbalance, such as applying tariffs and quota on imported goods. Government can both earn more tax revenue from tariff and control the trade imbalance. But there are several things that the government must take notice, such as smuggling goods into the country, possibly harmful goods may be smuggled into the country and harming their people. Government must apply extra security in the airports and ports to prevent unwanted things to happen.
ReplyDeleteTrade is an action of selling and buying goods and services between two nations or more. This action may benefit the society, but it can also harm the society. Free trade can cause a deficit to a country. This happen when the import is higher than the export. Import can be higher than export if a country buy more goods from outside than the one they sell. This condition is unfavorable because then the government need to take loan, spent their foreign currency, or gold reserves to fund it. As result some countries try to impose trade protection strategies to reduce deficit.
There are some forms of trade protection, such as tariffs, subsidies, quotas, embargo, and quality standard. Tariffs is the indirect tax impose to imported goods so that the price of imported goods will be more expensive and less people will buy it. Subsidies, is an action from government imposed to the domestic producer so that it can cut their operation cost and they are able to sell cheaper product compare to imported goods which sell in the country. Quotas is the way of limiting imported goods for example usually in one year they import 2000000kg of rice but now they only import 1500000kg of rice. Embargo is a method that totally cut all of the trade process so that there will be no imported goods came in. This method can also stop illegal goods such as weapons and drugs. The last method is quality standard which indirectly limits the amount of goods imported in. For example, in mobile phone market, if the materials which they use does not conform with the standard they will reject the product. All of the methods above can be use to maintain the import and export balance so that there will be no deficit in the country.
Base on all of the methods above it will encourage people to buy from domestic markets, and reduce demand will of imported products. As the result it will make the import amount decrease and balance the payments. However mechanism such as tariffs, quotas, and subsidy may face challenge from trading partners especially after the free trade and the WTO agreement. One of the best trade protection strategy is the quality standard. By using quality standard as a reason, a country can always limit the amount of imported goods without being challenge by trade partners.
In conclusion trade protection strategy can definitely balance the trade deficit. Even though some ways are better than the others. At the increasingly free market today it seems that the beat trade protection strategy or mechanism is quality standard.
Trade is when there is a transaction between countries or domestically, the trade can be in the form of services, goods, raw materials. Trade protection or protectionism is a policy when the policy hold or limit trade between states through methods such as tariffs on import goods and quotas. In the term of quotas this policy will limit or reduce the quantity of imported goods. As in tariff or tax usually vary as what type of goods is imported. More policy exist to control the trade system. There is also embargo system, this system can be considered as a negative policy as it deny to do transaction with other country. This system will cause retaliation or revenge usually if a country don’t want to accept the goods from other country the other country will not accept the goods imported to the country. The trade protection can be considered as a positive or negative, depends on what the condition in the country is.
ReplyDeleteHowever the trade protection may have a positive side, to an economic where the government can limit or decide the amount of goods imported to the country (quotas) this way can decrease the demand from customer so the government can build up a new positive culture to spend money on important things. Tariffs or tax also can be positive as it vary and depends on what type of goods is imported to the country, in some countries dairy is expensive because of tax, here in Indonesia electronics with famous brand are so expensive like : Beats audio, apple, but in US it’s cheaper this price can be caused by the tariffs. This can also minimize the amount of people who can own certain goods such as firearms, the cost of firearms in countries are expensive because of tariffs to prevent crime involving firearms. Other policy such as subsidies can be useful too to its people as the government pay for some cost for the goods so that the people in there can buy the goods cheaper than it’s original price example is Gasoline and petrol in Indonesia.
However this trade protection can cause negative effects as the people in the country is unsatisfied with the goods inside or domestic, so they can’t enjoy or purchase the goods they want, example is like mini Ipad in Indonesia, people go abroad to buy this attracting devices as it’s not available in Indonesia, people can’t enjoy variety of goods from other countries. As the tariff is high producers from other country will refuse to open a business in the country or sell it’s products to the country, as this happens the country may have low income and unemployment will happen and cause another reaction which is poverty as there is insufficient workplace available.
The trade barrier may help and can be an advantage as it control the economic system that runs in the country, limiting a product or goods is important sometimes as it can cause negative effects such as terrorism, crimes, health problems. It can also correct deficit as the country can rise the tariffs to pay the debt to other country.
Trade is the activity of exchanging goods and services between two or more individuals or even businesses across the international border. Two very common examples are export and import. A network allowing this to happen is called a market. Trade can be protected by applying trade barriers such as tariffs, quotas, embargo and subsidies. These barriers are normally induced by governments, and maintaining the balance of trade to stay a surplus rather than a deficit is one of their economic goals. However, is trade protection really reliable to correct the deficit in a balance of trade in goods and services?
ReplyDeleteWithout the act of protectionism, a free trade may happen between an economy and another. Free trade encourages countries to specialize in their production processes, allowing in the benefit of comparative advantage. Economies with different specializations in production can work together and exchange their goods and services by exports and imports. This international trade will lead to increased production and higher efficient productivity, as well as a rise in surplus so that deficit might be beaten. Furthermore, protecting your economy’s trade with barriers may cause your industries to be left behind by the rest of the world, especially when it’s not accepting or innovating for any market competitions. After that, trade protection leads to ‘grey imports’ or smuggling, meaning more resources are wasted on enforcement and it is guaranteed that corruption has the possibility to increase in the enforcement authorities.
However, by removing trade barriers from an economy’s trade activities, structural unemployment may occur. A big impact may also fall upon local firms, especially the small ones, as bigger competitions were to come onto them. Economies will also become over dependent on global markets if trade is not protected. Any downturns in the outside economies can affect the local economies so much that recessions can easily happen. For example, there was a recession happening in the USA and it creates a fall in the demand of exports of Australia, and so Australia’s export incomes, GDP and incomes fell, but its unemployment, in full contrast, rised. Moreover, some industries or economies might find it hard to compete (long term-ly) in conditions where the biggest markets in the world which make the most surplus from their products are able to dump them at low cost. It will be even more costly if an economy mostly exports agricultural products, while they’re paying for imports that are high in their value added costs. These are what makes free trade or trade without international barriers or protectionism unfavorable to economies.
In conclusion, the use of protectionism in economic trade should be reduced, as in fact, the benefits of international trade can lead to a correction in balance of trade deficit. The increased production, one of them, brings surplus to an economy. Higher level of productivity will also do the same, and instead of bringing more incomes into a country, trade protection can cover or slow down your economy from growing. This way, correcting the deficit may not be achieved efficiently.
Trade deficit occurs when the value of the country’s imports is greater than the value of its exports. The country’s balance of trade is negative. Trade deficit happens because the country cannot support the demands in the country, sometimes because there’s too many demand or the country don’t have enough resources to produce the product in demand, that they have to finally import goods from other country. To prevent more of this happening, countries impose trade barriers on its trade activities with another country and to balance its flow of goods and services.
ReplyDeleteThere are factors that make trade barriers or protection considered to be able to correct a balance of trade in goods and services deficit. Trade barriers, such as tariffs, subsidies, quota, and embargo, can make a country less dependant. If there was an economic recession, a country that is too dependant on trade with other countries will be in danger. But if the country’s independent, they can manage their product flow in the country without having to rely on other countries. Moreover, if the country’s not self sufficient, trade embargoes can be used against them. Trade barriers protect domestic or growing industries, and employment in the country. Trade barriers prevent imports from overcrowding the products produced by domestic industries. Because if there’s no trade barriers and the imports will come flowing into the country without any limitations, they can overcrowd the things produced in the country. The term “dumping”, which means that the dominating country will dump its exports such as rubber on another country with very low price, until the other country will have to close its industry, will happen. Industries are then forced to close down due to low demand and employees will lose their job. Soon, the market will be full of only imported goods and the country will have a trade deficit.
However, we also have to see the disadvantages of using trade barriers, as they do not always brings good things. Trade barriers that are too overprotective can make other countries that might want to export to our country lazy. If trade barriers such as tariffs are imposed too high, countries will back off and choose another country, as they thought that the cost is too expensive. So now domestic goods rule and monopolize the market. It’s good, because more people will get jobs, but the costumers suffer. With no competition, there are less variety of goods and services that people might choose to enjoy. Because the products are made by the domestics, they don’t improve. When there are competition with the imports, the domestic producers will try whatever they can to not lose to the imported goods, that’s why they try to produce something new and creative to beat the competitions. There’s no competition, so why bother trying to produce anything new and make more costs. The quality of goods provided in the country will decrease because the industries are more relaxed, the consumers are also not able to get competitive prices, instead they have to pay with what the home industry has set. Companies in the country that wants to expand will be disadvantaged with strict trade barriers too. Moreover, illegal economy will take place in order to get better quality goods which are not recorded into the country’s account.
So trade barriers have can help to correct the balance of goods and services deficit in the country because they protect domestic industries and controlling imports at the same time. However the disadvantages are also big and very arguable among economists as they create many troubles, the worst being embargo that can cause a strained relationship between countries. These troubles should be decreased and trade barriers should be controlled much better by respective countries.
International trade involves trading goods and services between countries all over the globe. Majority of the countries depend on international trade for the supply of goods or services they cannot produce themselves, thus creating a relationship between countries. Imports are the goods and services bought by a country and exports are the goods and services sold. Imports and exports together make up a country’s trade balance. A trade surplus, or a positive trade balance, refers to the condition where exports are bigger than imports, whereas a trade deficit, or a negative trade balance, refers to the opposite condition. International trade has its disadvantages for a country aside from its benefits, trade protection involves tools used by the government to limit international trade and minimize the disadvantages international trade has on its country. These tools include quotas, tariffs, etc.
ReplyDeleteSometimes the government uses these trade protection tools to correct a trade imbalance of a country. Is it possible? Of course it is. However, most of the time it doesn’t help overcome the trade imbalance, but worsens it instead.
Some may argue against this, but the facts are right in front of us. The aftermath of these tools cannot be predicted. Just by how much imports will fall as tariffs rise cannot be predicted. It is volatile and all that the government and the people can do is wait and see. Sometimes it falls drastically, sometimes slightly. Therefore, on some occasions, the results aren’t exactly what the government hoped for. Imports may have risen or fallen way too drastically and the economy suffers as a result. Moreover, trade imbalance, which the government is so eager to close, widens.
Apart from its unpredictable effects, trade protection may restrict some of the goods and services which the country need. Domestic firms may need the goods or services restricted. In order to replace these goods or services they may have to settle for a lower quality goods or services or pay a higher price for them. And this may slow down their progress and growth; they cannot progress as well as they should. Productivity falls as a response and as domestic productivity falls, export falls along and thus, prolonging the trade imbalance.
In addition, the people may rely on the imports restricted or limited as well. Trade protection reduces these imports and so, the prices may rise. Less people would be able to afford them and some may have to replace these with lower quality goods or services or live without these goods or services. If this happens, living standards will fall. And as living standards fall, health and education falls along, followed by productivity. And with a fall in productivity, exports fall as the country are able to produce less exports. Thereby, worsens the trade imbalance of the country.
In conclusion, trade protections such as quota, embargo and tariff may be used to protect the country form the negative effects of international trade and relieve the country from trade imbalances. However, false actions may result in a worse trade imbalance condition because of its volatile nature and the fact that no country is self sufficient. Some may be able to produce all the goods and services needed, but other countries may be able to produce better. Products that may support the country on its verge towards economic development, economic growth and trade balance. Trade protection could restrict this and its benefits. Therefore, trade protection may worsen trade imbalance instead of overcoming it.
Trade is when 2 or more people are doing an exchange of goods and services with money. It means that free trade means that when 2 or more country are trading without any barriers or protection. Some domestic product might not be able to compete with other goods from outside (imported goods), in this situation govt would like to gives any Barriers or Protection or Protectionism. Protectionism is policy that makes by govt to decrease or restrict the sell of goods or services from outside(imported). This might make the balance of payment or BOP not deficit. "Balance of payments (BoP) accounts are an accounting record of all monetary transactions between a country and the rest of the world." -Wikipedia.com. Barriers are like tariffs, quotas, embargo, and subsidies. Barriers are given by government because of it is needed to make a fair competition between import and export goods. BoP are deficit when the imports are more than the exports.
ReplyDeletePlaning this might makes some advantages. The advantages such as : it might increase productivity of a country, if import goods are in quotas it might not satisfied or meet the demand, it can motivate domestics to produce more. If they need to produce mo they need to have many workers, it may encourage people to get more job and increase employment. Tariffs also might helps to increase government revenue, because of tariffs gives charge to import goods when coming so it means it will gives money to government. It will also increase goods and services efficiencies and benefits to consumers. Because of consumer needs more goods producers need to produce goods more efficient also if consumers can't meet goods which they wanted they will buy it from outside and it will encourage domestic producers produce more goods, and it will increase variety of goods. Government also will controlling goods and services.
In other hand, there are also advantages such as : Other economics might do a barriers also in our goods, which means it will make our export decrease. Also it might produce pollutant and waste that might be harmful to our people, because of it needs to satisfy domestics needs it will produce pollutants and waste. It might cost inflation caused by tariffs.
In conclusion, I think it is better for govt to do barriers to make BoP not in deficit. Because of it produce more advantages rather than not doing it, problems might happens but it doesn't means that govt need to worry for that problem which might occur in long term period.
- Antony John Gerald