国际贸易英语第四章讲义

International Trade Theories

Chapter 4

Arguments for Government Intervention

in International Trade

In this chapter we’ll examine the reasons for government intervention in spite of the fact that some developed countries like the United States pay lip-service to free trade and talk a lot about the benefits of liberal trade.

Arguments for government intervention in western trade experts’views, fall into two categories: political arguments, and economic arguments.

Political Arguments

First of all let’s examine the political arguments. This category of arguments cover a range of issues including; protecting jobs and industries, national security, retaliation, protecting consumers, furthering foreign policy objectives and protecting human rights.

(1) Protecting jobs and industries

Yes, export trade can create more job opportunities. But this is only one side of the coin. On the other hand, increasing imports can also make workers lose their jobs, The very recent US threat of using anti-dumping policy against Chinese exports of color TV sets and textiles to the U.S. is based on such grounds. To protect jobs and industries an importing country can take such measures as VERs and import quotas. VERs means voluntary export restraints, and is regarded as one of the most important of the non tariff trade barriers. From 1981 to 1985 the United States induced Japan to reduce its automobile exports to the US for the reason that growing Japanese auto exports had made the Big Three U.S. auto makers suffer a big loss of $4 billion and nearly 300,000 American auto workers lost their jobs.

Similarly Japan’s quotas on rice imports from China and elsewhere are aimed at protecting jobs in that country’s agricultural sector, and the EU’s CAP was designed to protect the jobs of its politically powerful farmers by restricting imports, guaranteeing price, and granting subsidies in various forms.

Of course, a price must be paid for taking such measures. Such protection costs consumers dearly and creates possibility of retaliation.

(2) National security

Why is the United States trying hard to protect its semi-conductor industry from foreign

competition? The answer is simple: Because many American officials think semi-conductors are now such important components of their defense products that it would be dangerous to rely primarily on foreign producers for them. American restrictions of some high-tech exports are frequently justified on such grounds.

(3) Retaliation

Retaliation means “returning like for like, esp. returning evil for evil or paying back injury for injury.”

Again we’ll take the United States as an example. Previous US governments have often adopted this get-tough approach by threatening to impose punitive trade sanctions to achieve its political purposes.

However, retaliation is a highly risky strategy. If the threatened foreign government refuses to back down, say, by following a tit-for-tat policy, it will lead to a trade war or other conflicts. In the end both the threatening government and the threatened government will suffer a loss.

Other countries’governments also, from time to time, use the threat to intervene in trade policy as a bargaining tool to help open foreign markets and force trading partners to play by the rules of the game for international trade.

(4) Protecting consumers

After the foot-mouth and mad cow diseases had been found and reported over the radio and in the press, countries, one after another, imposed bans on importation of beef from Europe. The purpose of doing so was to protect their consumers from the possible health consequences. By the same token, the EU baned importation of hormone-treated beef and discourage Europeans from buying GM food from the United States.

(5) Furthering foreign policy objectives

Very often governments of various countries use trade to support their foreign policy objectives. The most obvious example in the end of 20th century was Iraq which had labored under the extreme trade sanctions after the UN coalition forces defeated the country in the 1991 Gulf War.

Using trade as an instrument of foreign policy is not without defects. Other countries can take counter-measures to undermine any unilateral trade sanctions. For example, the U.S. sanctions against Cuba had not stopped other western countries from trading with that country.

(6) Protecting human rights

Developed countries or the so-called western democracies, particularly the United States, every now and then, inflict punishments on countries with what they call human rights problems. Before China’s WTO entry there used to be an annual debate in the U.S. over whether or not to