China and the World Market

It has become very hard to talk about international trade without mentioning China, this second world power has risen from the dark a couple of years ago and now no matter where in the world you are you cant help but wonder if 'that product' was MADE IN CHINA.

No matter how much one tries not to mention China in this topic it is virtually impossible. Makes the rest of the world wonder, if China can do it- why can't we (developing countries)? There is hope after all!!!

Trade Policies for Developing Nations: What Should the US’s Role be?

Developing nations have for a long time been a prime target for developed countries such as the US and other European countries to take advantage of especially when it comes to agricultural goods and textiles. Developing countries have comparative advantage when it comes to agricultural goods and textiles, however developed countries have major protections on their agricultural goods that developing countries are unable to compete with. The US government gives billions of dollars every year to their farmers in forms of subsidies so that they are able to produce and sell at prices much lower than developing countries. There is no way that developing countries can afford to give out subsidies to their farmers, and even if it was possible to do that, it will in no way or form resemble the amount given to American farmers.

When the US enters in free trade agreements with developing country they need to take responsibility to their actions, and because this is considered as a partnership the US should not only be looking for what they can gain in the agreement but also how they can help their partner in benefiting just as much and possibly even more in the agreement. As a developed country entering in agreements with developing country they should not take advantage of that country just because this country is not as developed and as rich as they are. It is a social responsibility that should be taken very seriously when entering in free trade agreements with developing nations.

As an American you will have peace of mind knowing that your country is doing whatever they can to help elevate developing countries out of poverty and help make them more competitive in the long run. As I mentioned earlier this is a social responsibility and not an economic one. There is simple pride in knowing that your country is doing the right thing for the good of the majority. This will also benefit the US in the long run, economically as well as politically. Economically in that the US will now have more trading countries and therefore an increase in variety of goods, increased competition and therefore lower prices and better quality goods.

The US should help facilitate trade between developing countries and developed countries, both in agricultural goods and non-agricultural goods. Agreements should be made in favor of the developing countries, and trade barriers should be removed, and this includes subsidies made to US farmers in order to help decrease their prices.

The goods that developing countries import to the US such as clothing, textile and agricultural goods are the same goods that receive ridiculously large amounts of tariffs, and these are the same goods that are mostly consumed by middle class and lower class Americans. Therefore middle class and lower class America get hit with huge amounts of tariffs that they have to pay in forms of taxes to the US government. By removing these tariffs not only will the US be helping developing nations, but they will also be helping their own lower class population that are having difficulties paying these taxes.

Tariffs: A Source of Revenue or Protectionism?

“Customs duties on merchandise imports are called tariffs. Tariffs give a price advantage to locally-produced goods over similar goods which are imported, and they raise revenues for governments.” This is the description of tariffs according to the World Trade Organization (WTO). Many years ago tariffs were used as a major source of revenue for the government in the US and many other developed countries, and this is still the case in many underdeveloped countries in Asia and Africa. This is however not the case anymore in developed countries like the US and many European countries. Tariffs are used as a protective measure in the US, mostly to protect infant industries and agricultural goods such as maize, and rice.

Tariffs are too protective in developing countries such as the US, because by adding tariffs to imported goods the middle class and lower consumers are the ones being punished with higher prices. Tariffs add to the prices of consumer goods being imported in the country as well as domestically produced goods. Domestic producers see this new opening as a way of elevating their prices and that also causes a decrease in competition and therefore the level of quality is also decreased. By removing tariffs this will cause international competition and therefore decreased prices and better quality products.

Removing tariffs will benefit you as a consumer because the prices of finished goods will decrease almost immediately, the quality of products will increase almost immediately as the producers try to remain more competitive in the market. The consumer will be introduced to a larger variety of products from other countries, and this will result in increased consummation for the producer and also a larger market of sales.