Export: Barriers

Tariffs

A tariff is a tax placed on a specific good or set of goods imported from the country. Usually the tactic is utilized when a country's domestic output of the good is failing protecting domestic industries from foreign competitors. Some failing industries receive a protection with an effect similar to a subsidies in that by placing the tariff on the industry, the industry is less enticed to produce goods in a quicker, cheaper, and more productive fashion.

The third reason for a tariff involves skirting of what is called dumping. Dumping curtails a country producing highly excessive amounts of goods and dumping the goods on another foreign country, producing the effect of prices that are "too low". Too low can refer to either the price of the good on from the foreign market being lower than the domestic market. The other reference refers to the producer selling the product at a price in which there is no profit or a loss. The purpose (and expected outcome) of the tariff is to encourage spending on domestic goods and services.

Protective tariffs protect what are known as infant industries that are in the phase of expansive growth. A tariff is used temporarily to allow the industry to freely grow without the level of competition usually garnered. However, this line of debate is only valid if the resources are more productive in their new use than they would be if the industry had not been started. Also, the industry eventually must incorporate itself into a market without the protection of government subsidies.

Tariffs create tension between countries. Examples include the United States steel tariff of 2002 and when China placed a 14% tariff on imported autoparts[citation needed]. Such tariffs usually lead to filing a complaint with the World Trade Organization (WTO) and, if that fails, could eventually head toward the country placing a tariff against the other nation in spite, to impress pressure to remove the tariff.

Subsidies

To subsidize an industry or company refers to, in this instance, a governmental providing supplemental financial support to manipulate the price below market value. Subsidies are generally used for failing industries that need a boost in domestic spending. Subsidizing encourages greater demand for a good or service because of the slashed price.

The effect of subsidies deters other countries that are able to produce a specific product or service at a faster, cheaper, and more productive rate. With the lowered price, these efficient producers cannot compete. The life of a subsidy is generally short-lived, but sometimes can be implemented on a more permanent basis.

The agricultural industry is commonly subsidized, both in the United States, and in other countries including Japan and nations located in the European Union (EU).

Critics argue such subsidies cost developing nations $24 billion annually in lost income according to a study by the International Food Policy Research Institute, a D.C. group funded partly by the World Bank.However, other nations are not the only economic 'losers'. Subsidies in the U.S. heavily depend upon taxpayer dollars. In 2000, the U.S. spent an all-time record $32.3 billion for the agricultural industry. The EU annually spends about $50 billion annually, nearly half its annual budget on its common agricultural policy and rural development.

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