Exam 5: Nontariff Trade Barriers

From the perspective of the American public as a whole, export subsidies levied by overseas governments on goods sold to the United States

Export quotas, placed on Japanese auto shipments to the United States in the 1980s, led to rising prices of both Japanese autos and U.S.-produced autos purchased by the U.S.consumer.

A tariff-rate quota

According to U.S.trade law, which of the following is/are illegal in American markets?

Assume that a U.S.importer imports furniture from China.If the Commerce Department makes a preliminary investigation and finds evidence of dumping, the U.S.importer must pay a special tariff equal to the

Which government agency/agencies make investigations in order to resolve dumping cases?

For the United States, the Buy American Act has tended to increase consumer surplus for U.S.buyers of protected merchandise.

Figure 5.6 Domestice Supply and demand for Wine - U.S. -Consider Figure 5.6.In the global market for wine, the EU is willing to supply as much wine as the U.S.demands at $8 per bottle.If the U.S.imposes a quota of 15 bottles of wine, how much wine will U.S.consumers demand, how much wine will U.S.producers produce and how much wine will be imported?

Nontariff barriers on import of automobiles tend to

Figure 5.5. Mexico's Television Market -Consider Figure 5.5.Suppose that the governments of Mexico and Japan negotiate a voluntary export agreement in which Japanese TV exports to Mexico are limited to 8 units.Under the quota, the price of TVs in Mexico equals $250 while Mexicans produce 10 TVs and purchase 18 TVs.

Figure 5.4. Venezuelan Calculator Market -Consider Figure 5.4.The increase in Venezuelan producer surplus under the production subsidy totals

Figure 5.4. Venezuelan Calculator Market -Consider Figure 5.4.The cost of the production subsidy to the Venezuelan government totals

Figure 5.1 illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection. Figure 5.1. Alternative Nontariff Trade Barriers Levied by a "Small" Country -Referring to Figure 5.1, suppose the Mexican government imposes an import quota equal to 2 tons of steel.If Mexican steel importers behave as monopoly buyers and foreign exporters behave as competitive sellers, the overall welfare loss of the quota to Mexico equals

Figure 5.1 illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection. Figure 5.1. Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.With free trade, the quantity of steel imported by Mexico equals

To the extent that a local content requirement forces firms to locate production in a high-cost nation, product price rises and consumer surplus falls.

A licensing requirement, or an unreasonable standard regulating the safety or quality of a product that is imported into a country, is called a

Figure 5.1 illustrates the steel market for Mexico, assumed to be a "small" country that is unable to affect the world price. Suppose the world price of steel is given and constant at $200 per ton. Now suppose the Mexican steel industry is able to obtain trade protection. Figure 5.1. Alternative Nontariff Trade Barriers Levied by a "Small" Country -Consider Figure 5.1.Suppose instead that the Mexican government provides a subsidy of $200 per ton to its steel producers, as indicated by the supply schedule S_{M (with subsidy)}.As a result of the subsidy, the welfare loss to Mexico due to inefficient domestic production equals

If the U.S.demand for Korean steel is price elastic, an export subsidy granted to Korean steel firms will increase Korea's export revenue.

Figure 5.3. Sweden's Apple Market -Consider Figure 5.3.As a result of the quota, Sweden's consumer surplus

Under U.S.antidumping law, an antidumping duty can be levied when the U.S.Commerce Department determines that a foreign product is being sold in the United States at less than fair value and the U.S.International Trade Commission determines that the dumped product is causing economic harm to domestic producers.