Trade Components, Measures, and Commodities - Term Paper Example

    Components of Trade Trade entails the change of possession of services and goods from an individual or group to another by acquiring a commodity in exchange from the consumer. Trade may also be referred to as financial transaction or commerce. In addition, a market permits trading activities. The World Trade Organization is an association that attempts to liberalize and oversee international trade. The WTO performs a number of duties in relation to trade; the most significant include providing platform for dealing with conflicts and negotiation, and overseeing the operation, administration, and enforcing of the covered arrangements (Shah 1). This paper will look at trade components while discussing trade measures and commodities, tariff and non-tariff barriers, export taxes, quantitative measures, subsidies, consumption taxes, the impact of trade measures on supply and demand and prices, obstacles to reform of agricultural trade through WTO and raw materials. New trade measures have been documented, influencing almost 0.9% of universe imports and 1.1% of G-20 commodities imports from 2011 in the middle of October. The foremost trade measures include customs controls, trade remedy actions, import licenses, and tariff enhancements. There have been less new export measures introduced over the past months than in prior times. The most current upsurge of trade measure seems to attempt to inspire recovery via national industrial scheduling instead of dealing with the short-term impacts of the world crisis, which is a long-standing issue. In addition, the amassing of trade measures has to be deliberated where the distortions and stock of trade measures that persisted prior to the global financial turmoil are still in existence (Shah 1). Finally, trade measures have both negative and positive effects on commodities. Tariffs refer to taxes imposed on imports on products into a region or country. Tariffs enhance earnings to companies and dealers of resources to local companies that are competing with external importers and supply income for the governments. Tariff barriers refer to taxes enforced on commodities which adequately create an impediment to trade; nonetheless, this is not the ultimate responsibility of enforcing tariffs. Tariff barriers are also referred to as import restraints. This is because they reduce the quantity of commodities which can be brought into a region or country. In addition, non-tariff barriers are an alternative means for a country or region to regulate the amount of trading activities that it does with a different country or region, either for altruistic or personal reasons. Non-trade barriers are usually not in the form of a duty, for example, countervailing duties and anti-dumping measures, which have the impact of tariffs when they are ratified (Cockburn and Michael 1). A number of companies which support trading activities are interested about both non-tariff and tariff barriers to open trade and several regions and countries have attempted to lessen their trade barriers to facilitate the movement of products from one region to another. Export taxes have been utilized as a way of conserving raw materials for local production and acquiring revenue. Moreover, export taxes may be employed on raw materials when administrations attempt to benefit domestic companies that utilize a specified raw material by making them to acquire the raw materials at cheaper prices than external companies. Moreover, export taxes may be employed during inflation to stock specified home-based products for the domestic market (Cockburn and Michael 1). Export taxes are mostly utilized to enhance higher value-added practices. Finally, export taxes may at times produce a significant component of a country’s budget. Trade measurement refers to the procedure that manages the selling or buying of particular services or goods where the worth is ascertained by a measurement, for example, quality, weight, length, number, volume, or area. Article 11 of the General Agreement on Tariffs and Trade usually forbids quantitative measures on the exportation or importation of any commodity, by asserting that no restrictions or measures apart from taxes, duties, or additional charges shall be maintained or instituted by a member (Cockburn and Michael 1). This prohibition may result because quantitative measures are perceived to contain an effective protecting impact than tariff measures and may interfere with open trading activities. Subsidies refer to anything used to provide assistance to producers, and economic sector, or business. A large number of subsidies are placed by the administration for manufacturers or are delivered as financial assistance in a sector to avert the deterioration of that sector or an escalation in the prices of its commodities or to persuade it to acquire additional labor, for example, subsidies on several foods to maintain the cost of existence, subsidies to promote the enlargement of farm commodities and attain independence in the production of food, or subsidies to promote the trade of exports (Shah 1). Subsidies are frequently perceived as a form of trade barrier or protectionism by making local services and products falsely viable against imports. Nonetheless, subsidies may interfere with markets, and may compel tremendous economic costs. A consumption tax refers to a tax imposed on expenditure on services and goods. The tax base of such taxes is the finances utilized on consumption. In addition, consumption taxes are typically indirect, for example, value added tax, expenditure tax, excise tax, or sales tax. Nonetheless, consumption taxes may also be organized in the form of straightforward, personal taxation. Value added tax is applicable to the market worth combined to a material or product at every phase of production or distribution. Expenditure tax is applicable to the variation between an increase or decrease in savings and a person’s income. Excise tax applies to products such as gasoline or alcohol. Sales tax is applicable to the sale of products more than services (Shah 1). Trade measures have a number of effects on supply and demand, and prices. Trade measures permit nations to focus on activities where they have relative benefit. Trade measures promotes a more adequate allotment of resources causing an increase in supply of commodities, a decrease in prices of commodities and an increase in demand, thereby escalating earnings, because discovering novel and more efficient techniques of utilizing capital, labor, and land is essential for the growth of the economy. Decreasing tariffs has a positive impact on producers (Cockburn and Michael 1). They can enhance supply at a less expensive rate. Adequate trade measures may enhance the supply of commodities, with additional commodities being produced over a range of prices. The obstacles include Support policies and boundary defense of the affluent countries, multilateralism, and markets. Support policies and boundary defense of the affluent countries have detrimental effects on agriculture in underdeveloped nations. These policies comprise crop insurance subsidies, income support measures, and price guarantees. These policies and defenses of the affluent nations give exceptional to only the wealthy. Multilateralism is in a crisis. This is caused in part by inadequate development in the WTO concessions. The operational rules are only developed by affluent nations (Andrew 1). Markets for agricultural trade are largely dominated by influential countries. These countries oppose any ideas that may incorporate countries from all economic classes. Raw materials are put up for sale in what is referred to as the factor market. This is because capital, labor, and raw materials make up the factors of production. Raw materials are extremely essential to the process of production that the accomplishment of a region or country may be ascertained by the quantity of natural resources the nation possesses within its boundaries. A country or region that possesses a large amount of resources does not require importing significant materials and can export the resources to other regions or countries (Shah 1). Work Cited Shah, A. “Trade, Economy, & Related Issues.” Global Issues. 07 Jan. 2013. Web. 17 Feb. 2013. . Shah, A. “The WTO and Free Trade.” Global Issues. 02 Jul. 2007. Web. 17 Feb. 2013. . Shah, A. “Effects of Consumerism.” Global Issues. 10 Aug. 2005. Web. 17 Feb. 2013. . Andrew, R. “A New Front in Global Trade Wars.” New York Times 7 Feb. 2013. Web. Cockburn, W., and Michael, M. “Tariffs: Tariff and Tax in International Trade.”  Supply Chain Resource Cooperative. 15 Jan. 2011. Web. Read More