Kabir's Econ Blog

October 3, 2009

Trade

Filed under: Uncategorized — kabir1892 @ 9:00 am

index.4

The number of vehicles that are being made in the UK dropped by 31.5% compared to last year. Even though this is true, industries have noticed positivity with sales. This is because car owners can get a 2000 pound subsidy if they trade a car in that is 10 years old. They receive the payment from taxpayers and the industry. This scheme however, is done by February.

The scheme might be extended though by the industry. But this can only happen if others agree. Others believe that the cost to the taxpayer is too high and that the industry have to return to independence someday. However, there is still a chance of extension because it benefits the industry since employments would increase and the number of people producing will rise through the supply chain. 

Another reason is because sales of the vehicles brings value added tax. For example, an average price that they sell the car at is 9000 pounds. The government will then receive 1350 pounds. They say that around 300,000 cars have been sold with this scheme. And with the average price of 9000 pounds, the government makes 405 million pounds in value added tax. It is expected that 17.5% would be returned in value added tax by the end of the year.

Economists however, need to think this over since people might take advantage of the scheme by buying a new car at an event which is a huge purchasing decision. People could spend from other products and services to buy a car and will therefore mean that governments will not receive value added tax. So governments have to be careful with these costs and benefits before they decide to extend the scheme.

Advertisements

For and Against Protectionism

Filed under: Uncategorized — kabir1892 @ 7:41 am

2009-02-03 slowing world protectionism tortoise 600

There are six reasons why governments should still protect trade. First of all, they want to safegaurd domestic employment. As policies lower imports, aggregate demand will increase, and will therefore increase the level of output and employment domestically.

The second reason why protectionism is a good idea is because they want balanced payments. Competition will rise as imports will drop causing exports to increase which will then cause domestic output to increase.

The third reason is to prevent labor exploitation specifically in developing economies. The goal of this is to make imports reflect the true costs of production. This might also reduce the imports from some poor countries. 

The fourth reason why protectionism can be good because it can prevent dumping. This is where economies export goods at a price that is below the cost of production. This means that the domestic consumers are paying more than the countries that are buying it overseas.

The fifth reason is to safegaurd infant industries. Countries can enter new markets as comparative advantages arise. The industries need protection from competitors.

The final reason is to be able to make a developing country more diverse. A lot of developing countries rely on exports of primary commodities. This can cause the  countries to become more familiar to changes in commodity prices. To diversify and create new export revenue, they have to protect the industries from being familiar with international competition for a while.

Even though this may be true, there are several reason why protectionism is not a good thing. One reason though is because of the inefficiency of resource allocations. Tariffs or other protections are not the best solutions. This is because firms can remain inefficient. They don’t always have the incentive of reducing prices and compete globally if they think that tariffs will go on. This is also true with infant industries, where they are protected. If tariffs lasts for a long term then the infant industry can never develop. Firms that work with high costs can be unable to achieve competition with exports. Overall, resources will not be used in the most efficient way.

Initiative Blog-Solar Panel Tariff

Filed under: Uncategorized — kabir1892 @ 5:37 am

us-china

Solar Panel Tariff May Further Strain U.S.-China Trade

http://www.nytimes.com/2009/10/01/business/global/01tariff.html?_r=1&ref=business

Solar panel imports cause the United States to face $70 million in tariffs. This could cause an effect on the solar makers and the foreign and American distributors. With this in mind, the trade relationship that China and the US have can be strained. The agreement of the tariff to import solar panels from China happened on January 9th when the agency replied by saying that the “panels had become too sophisticated to qualify for duty free import”. But since the solar panels contained a electronic device that was used for safety and energy efficiency, it was used as a electric generator, causing a duty of 2.5%. This is a relatively good duty on imports since China had announced a 35% tariff on tires.

Even though this is true, even a small amount amount of duty can cause problems for global solar industries. This is because manufacturers of these panels are losing money since the competition is getting larger in China, and also because of the fall in prices. Unpaid duties have risen due to this, as well as penalties which are likely to double the cost.

The amount of solar panel that the US has imported and exported has been around the same in the first seven months. The Solar Energy Industries Association (China’s largest solar panel makers) say that the American tariffs on solar panels can cause other countries to impose tariffs as well on American exports.

To solve this problem, suggestions have come up. The decision was to divide the industries between the producers of solar equipment and importers in the United States. 

To avoid duties in the future, Chinese solar panel manufacturers are planning on changing solar modules to pants in the United States.

Duties are usually implemented on solar panels that have power on a electrical system. An example of this is built in lights which are considered as being electric lights and are subjected to have a tariff of 3.9%.

Create a free website or blog at WordPress.com.