.excelsior.edu/webapps/assignment/uploadAssignment?content_id=_1904946_1&course_id=_46636_1&assign_group_id=&mode=view”>M3A2 Short Paper: Action Plan
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What are some real-world outcomes of government intervention in international trade?
In Module 1, students learned about national differences in political economy. Through this Learning Activity, they will be able to appreciate the specific tools (policy instruments) that are used by governments in order to influence trade flows, typically in favor of their own economies.
But what is good for one economy may be bad for another economy! Therefore, students will also come to appreciate the impact such actions have on trading partners and what these trading partners often do in retaliation! Students will create Action Plans that assesses a specific trade barrier scenario.
Imagine you are the owner of a U.S. firm that produces personal computers in Thailand and then exports them to the United States and to Europe. You had decided to produce the personal computers in Thailand in order to take advantage of relatively low labor costs and a skilled workforce. Other possible locations you had considered were Malaysia and Hong Kong.
Now, the U.S. Government has decided to impose punitive 100% ad valorem tariffs on imports of computers from Thailand. The U.S. took this action in response to the Thai Governments administrative trade barriers that are restricting U.S. exports to Thailand.
As you read Chapter 7 in our textbook, imagine yourself as this business owner.
1) How should your firm respond? What actions can/should you take?
2) What does this mini trade war between the U.S. and Thailand tell you about the use of targeted trade barriers?
Consider how governments can take many measures to promote exports from their country. They can also take steps which regulate (mostly reduce) imports into their country. While the latter are typically imposed in the form of trade barriers, these can be formal or informal. They can be general (i.e. they apply to all imports), or they can be targeted (i.e. they apply to a specific product, or to the imports from a specific country, of a combination of the two they apply to a specific product from a specific country). Very often, targeted trade barriers lead to retaliation from the country(ies) being affected.
Prepare an Action Planwherein you:
· Summarize the problem
· Identify the possible alternatives open to you
· Evaluate the pros and cons of each alternative
· Select an alternative
· Defend your choice
· List the steps you will take in order to implement this course of action
· Summarize the anticipated outcomes (i.e. the answers to the problem)
· Express your opinion about the use of targeted trade barriers