The paper 'Political, Economic and Cultural behind Government Intervention in Trade" is a great example of business coursework. After World War II, global trade agreements contributed immensely to the reduction of trade barriers. The General Agreement on Tariffs and Trade (GATT) for instance established a code of commercial conduct for its signatories and set out the rule of non-discrimination among signatories, which is outlined in the most favoured nation (MFN) clause. In spite of these achievements, governments everywhere continue to restrict free trade. As such, whereas has trade has largely been liberalised, it cannot be said that there is totally free trade.
This paper seeks to discuss the reasons which make governments restrict trade. The motives behind government intervention could be political, economic or cultural. Thus, the discussion will centre on these three motives. Political motives The political arguments given for government intervention in trade cover a wide array of issues including protecting jobs, protecting industries or firms that are deemed significant for national security, imposing retaliatory measures to unfair competition, gaining influence and protecting human rights. These points are explained below. Protecting jobs Possibly the most common political argument for government involvement in trade is that doing so is necessary to protect local jobs from foreign competition.
For instance, the voluntary export restraints (VERs), which provided some protection to the US automotive, steel and machine tool industries during the 1980s, were inspired by such considerations (Agrawal, 2001, p. 125). Along the same line, a developing country like India which has a large force of youth who are not employed can argue that firms operating in India should not export jobs at the expense of the Indian population that is unemployed (Misra & Yadav, 2009, p.
95). Such an argument has been clear in the US, where many firms are outsourcing their functions out of India. For fear of losing jobs in the US, many states in the country are coming up with laws to outlaw business process outsourcing ventures (Aswathappa, 2005, p. 170). Another example is that of the import quota imposed by Japan on imports of rice, which is aimed at protecting jobs in the agricultural sector. Similarly, the Common Agricultural Policy (CAP) implemented by the European Union (EU) has job protection as one of the key objectives (Misra & Yadav, 2009, p.
95). National security States sometimes argue that it is essential to protect some industries for the reason that they are critical to national security. Industries that produce defence-related equipment often get such kind of attention. For instance, the US has argued that its semiconductor industry needs to be protected from foreign competition because semiconductors are essential components of defence equipment and it would be precarious to rely primarily on foreign suppliers. In this regard, the US government supports Sematech, a consortium of US semiconductor companies and provides $100 million annually as a subsidy to the consortium (Agrawal, 2001, p.
126). In both cases of protecting jobs and national security, the drawback involved is that import restrictions may require a country to incur costs of producing merchandise or services that it would have acquired from another country more affordably. In addition, the import restriction policy may be implemented for a longer time than it is necessary once it is adopted (Wild & Wild, 2012, p.
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