GlobalBusinessTodayNinthEditionChapter7GovernmentPolicyandInternationalTradeChapterOutlineOPENINGCASE:SugarSubsidiesDriveCandyMakersAbroadINTRODUCTIONINSTRUMENTSOFTRADEPOLICYTariffsSubsidesCountryFocus:AretheChineseIllegallySubsidizingAutoExports?ImportQuotasandVoluntaryExportRestraintsLocalContentRequirementsAdministrativePolicesAntidumpingPoliciesManagementFocus:U.S.MagnesiumSeeksProtectionTHECASEFORGOVERNMENTINTERVENTIONPoliticalArgumentsforInterventionCountryFocus:TradeinHormone-TreatedBeefEconomicArgumentsforInterventionTHEREVISEDCASEFORFREETRADERetaliationandTradeWarDomesticPoliticsDEVELOPMENTOFTHEWORLDTRADINGSYSTEMFromSmithtotheGreatDepression1947-1979:GATT,TradeLiberalization,andEconomicGrowth1980-1993:ProtectionistTrendsTheUruguayRoundandtheWorldTradeOrganizationWTO:ExperiencetoDateTheFutureoftheWTO:UnresolvedIssuesandtheDohaRoundCountryFocus:EstimatingtheGainsfromTradeforAmericaFOCUSONMANAGERIALIMPLICATIONS©2016byMcGraw-HillEducation.Thisisproprietarymaterialsolelyforauthorizedinstructoruse.Notauthorizedforsaleordistributioninanymanner.Thisdocumentmaynotbecopied,scanned,duplicated,forwarded,distributed,orpostedonawebsite,inwholeorpart.122GlobalBusinessTodayNinthEditionChapter7TradeBarriersandFirmStrategyPolicyImplicationsSUMMARYCRITICALTHINKINGANDDISCUSSIONQUESTIONSCLOSINGCASE:ChinaLimitsExportsofRareEarthMetalsLearningObjectives1.Identifythepolicyinstrumentsusedbygovernmentstoinfluenceinternationaltradeflows.2.Understandwhygovernmentssometimesinterveneininternationaltrade.3.Summarizeandexplaintheargumentsagainststrategictradepolicy.4.Describethedevelopmentoftheworldtradingsystemandthecurrenttradeissues.5.Explaintheimplicationsformanagersofdevelopmentsintheworldtradingsystem.ChapterSummaryThischapterbeginswithadiscussionofthesixmaininstrumentsoftradepolicy,includingtariffs,subsidies,importquotas,voluntaryexportrestraints,localcontentrequirements,andadministrativepolicies.Thissectionisfollowedbyadiscussionofthemeritsofgovernmentinterventionintointernationaltrade.Theauthorprovidesabalancedviewofthisdifficultissue.Thesecondhalfofthechapterfocusesonthedevelopmentoftheglobaltradingsystem.Ahistoricalcontextisprovided,alongwithaviewoftheglobaltradingsystemasitexiststoday.TheauthoracquaintsthereaderwiththeGeneralAgreementonTradeandTariffs(GATT)andtheWorldTradeOrganization.OpeningCase:SugarSubsidiesDriveCandyMakersAbroadSummaryTheopeningcaseexploresprotectionismintheU.S.sugarindustry.Usingacombinationoftariffs,quotas,subsidies,andpricesupports,theU.S.governmenthaseffectivelyshutoutforeignsugarproducersfromallbut15percentoftheU.S.market.ThenetresultisthatsugarpricesintheUnitedStatesaresignificantlyhigherthanpricesintherestoftheworldandU.S.consumersarepayingmorethantheyshouldforsugar,candy,andotherproductscontainingsugar.U.S.candymakersarenowcircumventingthesituationbyshiftingproductiontolowercostlocationslikeMexico.Discussionofthecasecanrevolvearoundthefollowingquestions:©2016byMcGraw-HillEducation.Thisisproprietarymaterialsolelyforauthorizedinstructoruse.Notauthorizedforsaleordistributioninanymanner.Thisdocumentmaynotbecopied,scanned,duplicated,forwarded,distributed,orpostedonawebsite,inwholeorpart.123GlobalBusinessTodayNinthEditionChapter7QUESTION1:ReflectontheU.S.policyonsugar.Asaproducer,howdoyoufeelaboutthepolicy?Doesyouropinionchangeifyouareacandymanufacturer?Wh...