Original Question: Should countries be allowed to enact non-tariff barriers to entry?

Original Question:

Should countries be allowed to enact non-tariff barriers to entry? In 200 – 250 words, state your opinion and give three reasons why you believe that your view is correct

Answer:

Nontariff barriers" encompasses a variety of government actions affecting trade. They refer to restrictions that result from prohibitions, conditions, or specific market requirements that make importation or exportation of products difficult and/or costly. NTBs also include unjustified and/or improper application of Non-Tariff Measures (NTMs) such as sanitary and phytosanitary (SPS) measures and other technical barriers to Trade (TBT).

- Non-tariff barriers normally include the following

  Import policy barriers

  Standards, testing, labeling and certification requirements

  Anti-dumping & countervailing measures

  Export subsidies and domestic support

  Government procurement

  Services barriers

  Lack of adequate protection to intellectual property rights

  Other barriers

Non-tariff barriers are necessary and a country should enact. Non-tariff barriers help protect the development of new industries against foreign rivals. If foreign industries compete with domestic industries that are not developed enough or large enough yet to take advantage of economies of scale, then NTBs, such as import quotas, can protect the 'infant' industry from too much competition through its maturing stages until it can compete on its own.

Similarly, NTMs also offer protection to certain economies against foreign countries that are interested to trade with them only because they know that the domestic economies will not be able to face competition from them and will eventually collapse, leaving them a monopoly of the domestic market. An example of such unfair trading is 'dumping'. The barriers to trade protect the domestic economies from such countries with an unfair relative advantage.

It is believed that the use of NTBs can result in increased domestic employment. Since foreign firms create jobs abroad, NTBs such as import quotas, reduce imports, make domestic production rise instead, and thus create domestic employment. Also, reducing imports from countries with cheaper labor levels the competition compared to the higher wages being paid for local production.

NTBs, moreover, by cutting down imports, help countries boost those local industries that are concerned with the national security and also those industries which help give the country economic independence.

References:

David, P. (2013). International logistics: The management of international trade operations (4th ed.). Berea, OH: Cicero Books. ISBN: 978-0-9894906-0-3

Grawe, S. J. (2009). Logistics innovation: a literature-based conceptual framework. International Journal of  Logistics Management, 20(3), 360-377.

Latest Question:

Thank you for highlighting the role of NTB as they often "offer protection to certain economies against foreign countries...", in your words. Let's take a look at Quotas, for example, and their role in international trade, as non-tariff barriers. Could you provide some arguments against imports quotas that often hinder the local industries, especially the so-called "infant" industries?