Written Assignment #6
How can trade liberalization exist on a nondiscriminatory basis versus a discriminatory basis? What are some examples of each?
Trade liberalization is the removal or reduction of trade barriers to promote international trade. It can exist on a nondiscriminatory basis such as with the WTO, who requires that the participating nations provide tariff reductions to all other members when giving one nation a reduction. It can exist on a discriminatory basis when there is a formation of regional trading agreements, this lowers the trade barriers of only the regional group and excludes the rest of the world.
Why has the so-called common ...view middle of the document...
[Citation needed]. High import tariffs (estimated at 18–28%) have the effect of keeping prices high by restricting competition by non-EU producers.
Public health professionals have also leveled criticism at the CAP and its support regimes, arguing that agricultural policy often disregards health. It is evident that supply outputs are generating widespread public health issues although most policy makers in Europe agree that they want to promote "family farms" and smaller scale production, the CAP in fact rewards larger producers. Because the CAP has traditionally rewarded farmers who produce more, larger farms have benefited much more from subsidies than smaller farms.
The static welfare effects of trade creation and trade diversion relate to a nation's decision to form a customs union? Of what importance to this decision are the dynamic welfare effects?
The static effects of economic integration are a trade creation effect, which increases a nation's welfare and a trade-diversion effect which decreases welfare. Trade creation happens when one customs union member is replaced by another member's imports with lower costs; this increases welfare because the access to lower cost goods results in a gain in consumer surplus and a loss in producer surplus. Trade diversion happens when the opposite happens and a member starts importing goods with higher costs.
These effects affect a nation's decision to form a customs union...