Economic Commentary - Essay Example

They are both asking China to implement what it had already agreed to which is the imposition of a lower ten percent tariff. In fact, the United States threatened in 1995(Baumol, 1998) (was ist baumol) to impose a one hundred percent tariff (100%!) on Japanese cars entering the United States if Japan will not remove its protectionist policy on car importations. Unless Japan would open its doors to United States automobiles, the one hundred percent tariff would push through. Korea and Japan have been charged by domestic competing companies in the United States of DUMPING their goods at very low prices( Baumol, 1998).

The United States companies are protected by putting up maximum goods called quotas that each country is allowed to export to the United States. The United States and the European Union member states are trying to impose that all countries adopt a free trade policy where each country is allowed to import and export goods to and from other countries. The local industries fight back importation of lower priced goods by asking government to increase the tariff on such imported goods. The government, then, is torn between implementing the low tariff rules of a free trade industry and to PROTECT its domestic industries from the flooding of imported low priced and high quality imported goods.

Advocates in the United States contend that the United States cannot live in a free trade market if the countries it deals with is imposing a protectionist policy. In this scenario, the protectionists will eventually win over the free trade states. The protectionist states want to export their goods to the free trade countries but does not want to import the goods from the free trade country at lower tariff rates. Table (das hier sieht gut aus) 1 below shows the cost of protectionism to consumers in the United States Market as : Industry Cost per United Sates job saved Apparel $139,000 Costumer Jewelry 97,000 Shipping 415,000 Sugar 600,000 Textiles 202,000 Women's footwear 102,000 Source: Gary C Hufbauer and Kimberley Ann Elliott, Measuring the Costs of Protectionism in the United States ( Washington D.C., Institute for International Economics, January, 1994) Table 1.3 pp. 12 - 13 Advantages of Protectionist policy Domestic industries are protected from competition against foreign companies which in this case produce better quality spare parts as compared to locally made Chinese made spare parts.

In fact, the European union has put up tariffs on Chinese clothing and shoes saying that the Chinese government is putting up the money to give