Market Share and Protection of Domestic Markets - Dissertation Example

The paper 'Market Share and Protection of Domestic Markets' is a great example of a macro and microeconomics dissertation. Subsidies are government policies aimed at assisting one or more industries and are usually accompanied by a financial benefit to the industry. Subsidies include tax incentives, and grants, or even license fee waivers.The use of subsidies especially export subsidies is pervasive globally affecting mainly the agricultural and manufacturing sectors.Various factors encourage the government to intervene in international trade such as strategic trade and protection of “infant” industries.

These are meant to expand the export sector in order to facilitate economic growth, and achieve other socio-economic objectives such as the expansion of employment opportunities.This intervention tends to cause distortion in international trade as adversely affected countries launch countermeasures to protect their domestic markets from subsidized goods. Overall, subsidies and countervailing measures act as barriers to free trade. Market presence and market share are affected as countries compete for the market through price suppression and price undercutting, which are unfair competition trade practices.

Negotiations at the world trade arbiter, World Trade Organisation are governed by Agreement on subsidies and countervailing measures that protect members against unfair trade practices. These disputes are lengthy as each party seeks to protect its industry and uses ambiguous means to extend direct or indirect subsidies. In addition, countries use intervention, especially, countervailing duties and anti-dumping fees as retaliatory practices aimed at deterring trading partners from unfair trade practices.

In most of the cases/disputes parties are not motivated to address the prevailing issues completely, rather they rely on patchwork solutions so as to protect their market positions without having to impose injurious trade sanctions on partners that can their respective domestic welfare Market share and protection of domestic markets dominate the objectives for imposing subsidies and countermeasures.