Why should we worry about misaligned participations in trade? According to the U.S. Department of Commerce, less than 1 percent of U.S. firms export. Tens of thousands of small-business manufacturers and service sector firms could export their goods and services, but do not. These companies often fear the challenges of going overseas. But all firms entering new markets face shortcomings and disadvantages when compared to local competitors. Due to a lack of local knowledge, unfamiliarity with market conditions, insufficient insights into consumer behavior, and newness to political decision making, all new entrants encounter a “burden of foreignness.” Policymakers need to help prospective exporters overcome this burden and successfully access new opportunities overseas.
President Trump has issued a new executive order focusing on international cheaters, who do not pay their debts due to dumping penalties. The order targets the problem of unpaid special customs duties known as “Countervailing Duties” (CVD), levied on products from companies found guilty by an “anti-dumping” investigation.
First to the jargon: “Dumping” refers to a type of predatory trade practice. In its simplest form, it amounts to a company selling a product in a foreign market for less than it costs to make it. In theory, the goal of “dumping” is to drive down the price, and in doing so, muscle out smaller, weaker competition in order to later establish a monopoly status on that market. Under the rules of the World Trade Organization, dumping is a prohibited practice, and countries are permitted to levy special taxes on goods found to be unfairly dumped in their market in order to rebalance the price level. These tariffs are called “Countervailing Duties”, abbreviated as CVD.
Spring Break 2016 is around the corner. While you are packing up swimsuits and heading for somewhere warm, we are here to offer you some thoughts of islands and beauty. If you are planning to get some readings done by the beach, this review of trade policy in Fiji 2016 is waiting for you to pick up and read.
It is hard to understand the value of global trade and exports in particular. Exports can determine the level of imports that a country can sustain, affect currency values as well as the fiscal and monetary policies of countries, and shape public perception of a nation’s ability to compete. In 2008, the U.S. was importing 1.5 times as much as it was exporting, creating a trade deficit of $680 billion. Large trade deficits are not sustainable in the long run. They are a strong indicator that a country is consuming more than it is producing, which reduces independence by making it increasingly reliant on the products and services of other nations.
Increasing export volume helps reduce the trade deficit. This is a wise course of action for many reasons, but one of the most important is that exporting creates jobs. In fact, the International Trade Administration of the U.S. Department of Commerce reports that, in 2006, exports of manufactured goods supported 6 million U.S. jobs. Just as importantly for companies, however, is how exporting can help them achieve economies of scale. By broadening reach and serving customers abroad, it is possible to produce more and to do more efficiently in industries affected by economies of scale. This often leads to lower costs and higher profits both at home and abroad
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. 14 -15.
According to the latest reports,released on July 12, 2011, the U.S. Trade Deficit has increased greatly from April to May due in part to the rising oil costs. The U.S. Department of Commerce states that the good and services deficit increased from $43.6 billion to $50.2 billion over that month. Click here to read the press release in its entirety.
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