Global business in the Asian century

Running Head: Asian 0
Global business in the Asian century

Asian 1
1) Identify the policy instruments used by governments to influence international trade
flows.
Ans1. There are seven main instruments, which are utilized by the administration to influence
international trade flows-
 Subsidies/ Grants
 Tariffs
 Antidumping policies
 Import quotas
 Administrative policies
 Voluntary export restraints
 Local content necessities
Tariffs are the instruments policies utilized by the government, which are the modest
instrument of trade policy. It protects domestic enterprises from the external competition by
enhancing the cost of imported merchandise through an expense. They are valued to the
native country as they raise revenue. It is stated that buyers in the local market, as a rule,
wind up repaying more for imports due to levy, which reduces the overall productivity of the
world economy. For example, the United States levies a 45% duty on Japanese calfskin and
33% duty on Chinese auto tires (Rodan, 2016).
Subsidies are another policy, which is being utilized by the government to stimulate
over inefficiency, production, and reduced trade. It takes several forms i.e. tax reductions,
government equity participation, cash grants, and low-interest loans in the domestic
enterprise. The ultimate goal of subsidies is to assist in bringing down the general production
expense inside the industry to permit them to compete more adequately against foreign
goods. For instance, the Singapore government delivers direct cash payments and default-free