WEEK 3 DQ 1 - IMPORTING, EXPORTING, AND

SOURCING

WORD COUNT: 762

INTRODUCTION
Imports and exports are both tools of international trade
mechanisms employed by organisations and countries to
move goods and services across national boundaries
(Seyoum, 2000). It is also used for organizational expansion
and sourcing of either raw materials or finished goods.
However, despite growing globalization; free trade
proponents and disappearance of national boundaries;
imports and exports must still be regulated to maintain the
balance in World Economy. Without import-export
regulations, countries that have clear advantages like China
will assume the defacto world leader without any form of
restraints. Beyond economics, this type of scenario could
put too much political power in the hand of one single
government in this case a communist government. This is
not good for the continued co-existence of the nations and
its people as the situation could lead to gross abuse of
Chinas position. There are several ways of regulating
import-export and they include Tariffs and Taxes (Keegan,
2013). Countries can impose varying degrees of tariffs to
control volume of imports or give tax reliefs to encourage
exports. It is also possible to slam high tariff on exports if a
government wants to discourage excessive export to protect
local consumers from self-induced inflation on account of
scarcity occasioned by excessive export of a good. Absolutely
free and unrestricted trade across all nations of the world
can put affluent countries like the U.S. and UK with higher-
than-average cost of production to be at huge economic
disadvantage compared with countries like China and
Vietnam. Reverse dumping is the opposite phenomenon
where goods or services are exported to a foreign country
and made to sell at excessively higher prices. (Flam, 1985)

QUESTION 1.
When EU slams high tariff on shoes import from China and
Vietnam, the EU government gains in several ways. Once
EU applies tariffs, the street price of shoes increase by at
least $6.5 and fewer people will by Chinese and Vietnamese
imports. Firstly, they can gain political point and capital for
protecting the local EU shoe industry. Secondly, they also
gain political and economic capital for protecting EU jobs by
forcing more shoe manufacturing to happen within the
geographical boundaries of EU countries. Thirdly, in
slamming the tariff hike; the EU government gains by
further strengthening the position of the EU as an economic
trade block relative to the global economy. (Nicolaidis,
2006). This is important because size matters in the global
economy. Certain economic, social and political concessions
are given to China today simply because of the size of its
economy. It is surprising that the U.S. will wholeheartedly
support Free Trade and oppose Tariffs against China as
contained in our text because both the people and
government of the U.S. are feeling the hard bite of American
jobs that have been exported to China by major
manufacturing multinationals like Apple, GE etc. that tried
to avoid high labour and raw material costs.

However, EU consumers lose because the average price of
shoes in general, will go up dramatically. When shoes get
more expensive, it becomes more difficult for them to buy
and they will have to spend their hard-earned money to buy
fewer shoes. Again, the consumers will also loose because
they will have fewer variety of shoes to chose from after the
tariff.

QUESTION 2
I do not agree with Financial Times position a bit! Even for
purely economic reasons alone, continued dumping of
Chinese shoe in Europe will completely kill the local EU
shoe manufacturers mid to long term. Predatory dumping is
said to occur if the intention is to suppress or kill the
external dumping market (Bown et al, 2012). Considering
the huge size of Chinese economy second largest in the
world at $9.8 nominal GDP, China can actually sustain
these exports and kill EU shoe manufacturing capacity in
reality. However, we also know that political considerations
of drive economic decisions and policies (Acemogluy, 2013;
Vesth, n.d.), China may have other considerations with far
greater implications than economics, for dumping shoes in
Europe. The difficulty in avoiding all forms of unfair
competition is one reason why antagonists of Free Trade
exist today. Dumping shoes in Europe creates unfair
competition for China. Apart from the increased tariffs
introduces by the government of EU, several scholars have
researched other measures to regulate trade and impose
restrictions on aggressive exporting countries like China.
Among these are Anti-dumping measures and
Countervailing measures, product size regulations etc.
(Neufeld, 2001; Keegan, 2013; Prusa et al, 1997). There are
also other non-tariff measures like Quota, Licenses and self-
restrictions.

REFERENCES:
Seyoum, B. (2000) Export-Import Theory, Practices,
and Procedures. The Haworth Press: the Taylor &
Francis e-Library. Available online:
http://rafael.glendale.edu/poorna/IB/Seyoum%20Boo
k.pdf. Accessed 11
th
April, 2014
Veseth, M. (n.d.) What is International Political
Economy? Available Online:
http://www2.ups.edu/ipe/whatis.pdf. Accessed 11
th

April, 2014
Acemogluy, D. and Robinsonz, J.A. (2013) Economics
versus Politics: Pitfalls of Policy Advice.
http://economics.mit.edu/files/8741. Accessed 11
th

April, 2014
Neufeld, I. (2001) Anti-Dumping And Countervailing
Procedures Use Or Abuse? Implications For
Developing Countries. Policy Issues In International
Trade And Commodities Study Series No. 9. Available
Online: http://unctad.org/en/docs/itcdtab10_en.pdf.
Accessed 11
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April, 2014
Prusa, T.J. and Feenstra, R. C. (1997) The Effects of
U.S. Trade Protection and Promotion Policies.
University of Chicago Press. Available Online:
http://www.nber.org/chapters/c0313.pdf. Accessed
11
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April, 2014
Bown, C.P. and McCulloch, R. (2012) Antidumping and
Market Competition Implications for Emerging
Economies. Policy Research Working Paper 6197.
Available Online:
http://elibrary.worldbank.org/doi/pdf/10.1596/1813-
9450-6197. Accessed 11
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April, 2014
Flam, H. (1985) Reverse Dumping. Seminar Paper No.
328 Institute for International Economic Studies 9-106
91 Stockholm. Sweden. http://www.diva-
portal.org/smash/get/diva2:329569/FULLTEXT01?ori
gin=publication_detail. Accessed 11
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April, 2014

Nicolaidis, K. and Meunier, S. (2006) The European
Union as a conicted trade power. Journal of
European Public Policy 13:6 September 2006: 906
925. Available Online:
file:///Users/Sam/Downloads/d912f513fbf240d9fb.p
df. Accessed 11
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April, 2014