Question

Over the decades trade volume has increased due to reduction in tariffs, increased trade agreements, and subsidies among other trade enhancing measures. Gerber (2018) observed that the trade system has established trading rules and reduced tariffs under the GATT and WTO umbrellas. Although there has been significant reduction in tariffs and trade barriers there are still advances to eliminate tariffs even further. One might argue that such a move would only have diminishing returns to trade negotiations and a minor impact on GDP. Why would nations then continue to desire further market openings? Please respond to either following and use examples where applicable: NB: You can choose to respond to 1 or 2 but 3 is mandatory. So, in total respond to at least 2 topics, 3 being one of the 2 topics. Cite at least three reasons why economists trade openings. Explain why costs to consumers of a tariff or quota are greater than the net welfare costs to the nation. Which industries are more heavily protected in the United States and Japan? Are high income or low-income nations more affected by American and Japanese trade barriers? Explain.

Answer 1

Nations desire to expandmarket opening to tap Globalisation as method to achieve Cost Leadership and Differentiation and bring in FDI for leveraging competitive advantage.

Economists trade openings to understand and analyse market scenario, togayge consumers demand and evakuate overall impact on economy.

Costs to consumers due to tarriffs create lower impirts and ousg domestic manufacturing where nations lack competitive advantage and consequently the supply is reduced with higher manufacturing costs causing prices to escalate and demand to curb and hence this exceeds net social welfare cost as welfare gets curbed drastically.

US and Japan has Manufacturing as most protected industries as Chinese counterparts dump aluminium and steel and multiple commodities into US Japan causing wide scalr unemployment and hence protectionism measures are applied in this manufacturing industry.

High income an dlow income countries do get affected as trade barriers within US cause Many smaller asuan countries debarred from trading and similarly Jaoan becokes more inaccessible to Latin America and Canada And Mexico as their Free trade Agreement lies within Asian countries.