Government Policies Can Help Or Hinder

Governments often impose barriers that interfere with trade. The Office of the U.S. Trade Representatives (USTR, www.ustr.gov) defines trade barriers as “government laws, regulations, policies, or practices that either protect domestic products from foreign competition or artificially stimulate exports of particular domestic products.” One typical barrier consists of “voluntary” import restraints that are applied selectively against trading partners, an approach used primarily with the textile, steel, and automotive industries. Voluntary restrictions, ensured through severe threats against trading partners, are designed to help domestic industries reorganize, rebuild, and recapture their trade prominence. Countries that do no use voluntary measures often implement tariffs. This approach helped preserve the Harley-Davidson Company in the U.S. during the 1980s when the duty on imported Japanese heavy motor-cycles was temporarily bumped from just over 4 percent to almost 50 percent.

 

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 17.

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