00:01
We're going to define some different economic terms.
00:05
The first is a tariff.
00:10
A tariff, simply put, is a tax that is levied on an imported good.
00:14
There are two types of tariffs.
00:17
The first is a unit or specific tariff that is a tax levied as a fixed charge for each unit of a good that is imported.
00:26
An ad valorem tariff is levied as a proportion of the value of imported goods.
00:32
A quota is a government imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period.
00:43
They are used in international trade to help regulate the volume of trade between them and other countries.
00:50
Countries sometimes impose quotas on specific products in order to reduce imports and increase domestic production.
00:57
In theory, quotas boost domestic production by restricting foreign competition.
01:04
Protective tariffs are designed to shield domestic production from foreign competition by raising the price of the imported commodity.
01:13
Revenue tariffs are designed to obtain revenue rather than to restrict imports.
01:20
The two sets of objectives are, of course, not mutually exclusive.
01:25
Protective tariffs, unless they are so high as to keep out imports, yield revenue, while revenue tariffs give some protection to any domestic producer.
01:34
Dumping occurs when a country or company exports a product at a high price that is lower in the foreign importing market than the price in the exporters domestic market.
01:46
The biggest advantage of dumping is the ability to flood a market with product prices that are often considered unfair.
01:53
Dumping is legal under world trade organization wto rules unless the foreign country can reliably show the negative effects the exporting firm has caused its domestic produce.
02:05
Producers.
02:07
Countries use tariffs and quotas to protect their domestic producers from dumping.
02:13
Protectionists policies place specific restrictions on international trade for the benefit of a domestic economy.
02:21
Protectionist policies typically seek to improve economic activity, but may also be the result of safety or quality concerns.
02:30
The value of protectionism is a subject of debate among economists and policy makers.
02:36
Tariffs, import quotas, product standards, and subsidies are some of the primary policy tools a government can use in enacting protectionist policies.
02:46
Free trade is a policy by which a government does not discriminate against imports or interfere with exports by applying tariffs to imports or subsidies to exports...