Glamor Economics

Chapter 194

Chapter 24 Section 5 Opening up and protection at the same time——Trade protectionism

On April 2004, 4, two things happened simultaneously in the field of foreign trade: first, New Zealand officially recognized China's market economy status; second, the US Department of Commerce made a final ruling on Chinese color TVs exported to the US, ruling that Chinese companies had dumped Behavior.Both events are related to market economy status in anti-dumping, but the results are very different.Why is China still called a non-market economy country by many western countries including the United States and the European Union after more than 14 years of reform and opening up, having established a market economy system and joining the WTO?

This is because China's growing foreign trade has made many countries secretly wary.When high-quality and cheap "Made in China" products are blooming in the world market, the United States regards China as a non-market economy country and adopts anti-dumping rules that are unfavorable to China.The rules stipulate that for non-market economy countries, “as long as the method used to determine the normal value is appropriate and reasonable”, the price of similar products in a market economy country can be used as a standard to determine whether it is dumping and the extent of dumping, and Impose corresponding high taxation measures.As a result, many of China's export products were judged to be dumped without being dumped, and were judged to be highly dumped when the margin of dumping was originally slight, and the economy was severely hit.

In fact, this is a form of trade protectionism.Trade protectionism is an economic policy that sets high tariffs on imported products, limits import quotas, or otherwise reduces imports in order to protect domestic manufacturing from foreign competition.It is the exact opposite of the free-trade model, which exempts imports from tariffs and allows foreign products to be brought into the domestic market without imposing heavy taxes on domestic manufacturers.

资料表明，中国有3/5以上的出口企业和2/5以上的出口产品面临技术性贸易壁垒的限制。且根据中国国家质检总局2008年12月30日公布的最新调查结果表明，仅2007年一年，国外技术性贸易措施让中国出口企业损失上百亿美元。全年出口贸易直接损失494.59亿美元，占同期出口额的4%以上，企业新增成本264.31亿美元，比2006年增长72.76亿美元。

Many survey results have shown China's disadvantaged position.Behind the trade barriers successively erected by various countries, China is "injured".Wang Shichun, director of the Import and Export Fair Trade Bureau of the Ministry of Commerce, said that the new challenge facing China's foreign trade development is technical barriers to trade. As a developing country, most of the products exported by China are low-tech products, which are stuck at the gate of the country by many indicators of developed countries. outside.

Theoretically, trade protection will limit the economic development of a country, but why are many governments still keen on trade protection?This is because we implied an assumption in the theoretical proof, which is to assume that the government aims to maximize the overall interests of the country in the process of formulating policies, but in fact the government may deviate from this goal under the influence of some forces .Trade protection is beneficial to producers. Although the number of producers is small, the average income shared by each producer from trade protection is relatively large. Therefore, the interest group has a high enthusiasm for requiring the government to implement trade protection policies, and has a great influence on the government; Trade protection is not good for consumers. Although there are a large number of consumers, the average income shared by each consumer without trade protection is small. Therefore, the interest group’s enthusiasm for opposing the government’s implementation of trade protection policies is low, and the impact on the government is small. .As a result, the government's trade protection policy can prevail.

For example, the quality of American tomatoes is low and the price is high, while the price of Mexican tomatoes is high and low. No matter from which point of view, it is beneficial for the United States to allow Mexican tomatoes to enter.But in 1996, the Clinton administration restricted the export of Mexican tomatoes to the United States. Why?This is because tomato imports benefit consumers, but each consumer does not gain much; the main losses are Florida growers. Although they are small in number, the loss shared by each person is not small.

Of course, sometimes in order to protect the development of certain domestic industries, appropriate trade protectionism is still necessary. In the 20s, Japanese cars were of inferior quality and high prices.In order to support the auto industry, the Japanese government not only restricts the import of foreign cars, but also provides preferential loans for domestic cars through the Development Bank of Japan. Other measures to promote exports include export subsidies, export loans, and special preferential tax terms.These measures helped the Japanese automobile industry to develop rapidly. By the mid-50s, Japanese automobiles had international competitiveness and occupied a large share in the US and European markets.

Although free trade is good for all countries, the realization of free trade is conditional.When the conditions are not met, it is still necessary to restrict imports and encourage exports by imposing tariffs, formulating quotas, export subsidies and other measures to protect the domestic industry.A very important issue here is which industries in the country are worthy of protection and which industries are not, because it is impossible to protect all industries.In this respect, the infant industry theory is worth learning.The so-called infant industry refers to an industry that is not yet mature at the growth stage, but has potential advantages.For example, the Japanese automobile industry in the 20s mentioned above was an infant industry. It is worthwhile for the government to protect such an industry.Generally speaking, when a certain industry is small in scale and its production cost is higher than the international market price, if it is allowed to compete freely, the industry will inevitably lose money.If the government gives protection for a period of time, so that the industry can develop and grow to a certain scale before facing free international competition and making profits, then the industry can be called an infant industry.

Nevertheless, under the trend of globalized economy, trade protectionism prevails, which is not a good thing for any country. On the one hand, we must dismantle trade barriers, and at the same time, take necessary measures to protect the healthy development of our own economy.

[links to related words]

Trade barriers are also called trade barriers.The artificial restrictions on the exchange of goods and services between countries mainly refer to various restrictions imposed by a country on the import of foreign goods and services.Trade barriers are generally divided into two categories: tariff barriers and non-tariff barriers.

Tariff barrier refers to a trade barrier formed by the government setting up customs to levy tariffs on importers and exporters when import and export commodities pass through the customs border of a country.According to the purpose of collecting tariffs, there are two types of tariffs: one is fiscal tariffs, whose main purpose is to increase national fiscal revenue; the second is protective tariffs, whose main purpose is to levy high taxes on the import of foreign goods to protect the country's economic development. Amount of tariffs.The higher the protective tariff, the greater the effect of protection, and it is even equivalent to banning imports.

Non-tariff barriers refer to trade obstacles formed by all import restrictive measures except tariffs, and can be divided into direct restrictions and indirect restrictions.Direct restriction means that the importing country takes certain measures to directly limit the quantity or amount of imported goods, such as import quota system, import license system, foreign exchange control, minimum import price, etc.Indirect restrictions are to indirectly restrict the import of goods through the formulation of strict regulations and regulations on imported goods, such as discriminatory government procurement policies, harsh technical standards, health and safety regulations, inspection and packaging, labeling regulations, and other mandatory regulations. technical regulations.

Import quota refers to the system that the government of a country stipulates in advance the quantity and amount of imports of certain commodities within a certain period of time. Imports can be made within the quota, and those exceeding the quota are not allowed to import, or impose higher tariffs or fines. Also known as import quota system.There are two main types of import quotas: absolute quotas and tariff quotas.Absolute quotas refer to setting a maximum amount for the quantity or amount of imports of certain commodities within a certain period of time. After reaching this amount, imports are not allowed.Tariff quota means that the importing country sets a certain quantity limit on the quantity of imported goods. A lower tax rate or tax exemption can be applied to the goods imported within a certain limit, but a higher or general tax rate is applied to the goods imported after the limit has been lifted.

(End of this chapter)