INTERNATIONAL TRADE - Part 19

Sometimes this approach is buttressed by claims that this or that foreign country is being “unfair” in its restrictions on imports from the United States. But the sad fact is that virtually all countries impose “unfair” restrictions on imports, usually in response to internal special interests. However, here as elsewhere, choices can only be made among alternatives actually available. Other countries' restrictions deprive both them and us of some of the benefits of international trade. If we do the same in response, it will deprive both of us of still more benefits. If we let them “get away with it,” this will minimize the losses on both sides.

Even more effective disguises for international trade restrictions are health and safety rules applied to imports — rules which often go far beyond what is necessary for either health or safety. Mere red tape requirements can also grow to the point where the time needed to comply adds enough costs to be prohibitive, especially for perishable imports. If it takes a week to get your strawberries through customs, you may as well not ship them. All these measures, which have been engaged in by countries around the world, share with import quotas the political advantage that it is hard to quantify precisely their effect on consumer prices, however large that effect may be.

CHANGING CONDITIONS

Over time, comparative advantages change, causing international production centers to shift from country to country. For example, when the computer was a new and exotic product, much of its early development and production took place in the United States. But, after the technological work was done that turned computers into a widely used product that many people knew how to produce, the United States retained its comparative advantage in the development of computer software design, but the machines themselves could now be easily assembled in poorer countries overseas — and were. Even computers sold within the United States under American brand names were often manufactured in Asia. By the early twenty-first century, The Economist magazine reported, “Taiwan now makes the vast majority of the world's computer components.” This pattern extended beyond the United States and Taiwan, as the Far Eastern Economic Review reported: “Asian firms heavily rely on U.S., Japanese and European firms as the dominant sources of new technology,” while the Asian manufacturers make “razor-thin profit margins due to the hefty licensing fees charged by the global brand firms.”

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