Analyzing Government Policies and International Trade Dynamics

This assignment explores the policy instruments governments employ to influence international trade flows and the motivations behind their intervention. It identifies seven main instruments, including tariffs, subsidies, import quotas, anti-dumping policies, administrative policies, voluntary export restraints, and local content requirements, providing examples of their application. Furthermore, the assignment delves into the reasons for government intervention, categorizing them into economic and political purposes. Economic reasons include protecting infant industries and strategic trade policy, while political reasons encompass safeguarding jobs, national security, and human rights. The assignment offers a comprehensive analysis of these policies and their implications in the context of global business and trade dynamics, supported by relevant examples and references.

Running Head: Asian 0
Global business in the Asian century

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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

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loans to agriculturalists when commodity costs tumble to reimburse for any shortage
(Vedung, 2017).
Import quotas are a direct restriction on the quantity of some product that might be
imported into a nation. For example, the Singapore government impose high taxes on tobacco
products, petroleum products, distilled wine, and motor vehicles (Koul, 2018).
Anti-dumping policies are designed to punish the international organization that
involves dumping. For example, the government of Singapore has levied Anti-dumping
policies on the goods imported into the nation.
Administrative policies are the administrative rules that are designed to make it hard
for imports of foreign products to enter the country. For example, the Singapore government
is concerned with various non-statuary guidelines and provide consideration for employment
without respect to death, resignation, or retirement (Koh, 2017).
Voluntary export restraints are stated as quotas levied by the exporting nation at the
request of the importing nation's government. For example, there is a limitation on auto-
exports to Singapore levied by Japanese producer.
Local content necessities are the policies levied by the administration that require the
organization to utilize domestically produced goods to operate in an economy. For example,
the Singapore government executed an “import balance,” which force automotive firms to
establish a neutral trade balance (Choudhary & Mausom, 2017).
2) Understand why governments sometimes intervene in international trade.
Ans2. It is stated that there are actually two reasons for governments’ intervention in trade
policy: economic and political purposes. The political argument for trade intervention is
critical to ventures in developing nations. Government intervenes in the international market

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due to the reason that they need to safeguard jobs and other industries from global business.
The second main reason for the interference of government is the protection of national
security. The prevention of clients is the major cause for the intervention of government,
which protects nations from exporting products to the United States. It is stated that the
government can utilize trade policies to advance human rights with other nations, which can
be pleased with a most favoured nation status (Bennett & Raab, 2017).
There are also economic causes for government involvement in trade policy. The
reason behind this is to prevent new industries from vicious rivalry, which is especially
significant to the industries in advancing countries. It is stated that protecting infant
enterprises can sometimes generate incompetent firms that are not suited to enter the
international business context. The industry should be protected so that they can maintain and
develop competition internationally. It is stated that if a country has the opportunity to
maintain an effective competitive position, they should be able to raise appropriate funds. For
instance, because of protectionism, Singapore was capable to maintain the world’s tenth
biggest auto industry because of quotas and tariff barriers. The last economic cause for the
intervention of government depends upon the strategic trade policy, which is because of
economies of scale. Several economists are concerned with this involvement as it hurts
organizations that are entering into a new product. Additionally, they feel that an
administration that pushes to have their domestic enterprise remain in control of a business,
which ends up hurting the international economy (Vernon, 2017).

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References
Bennett, C. J., & Raab, C. D. (2017). The governance of privacy: Policy instruments in
global perspective. London: Routledge.
Koh, G. (2017). Bureaucratic rationality in an evolving developmental state: Challenges to
governance in Singapore. In Singapore, 23(4), 85-112
Koul, A. K. (2018). WTO Agreement on Import-Licensing Procedures. In Guide to the WTO
and GATT, 32(7), 497-503
Rodan, G. (2016). The political economy of Singapore's industrialization: national state and
international capital. Australia: Springer.
Vedung, E. (2017). Policy instruments: typologies and theories. In Carrots, sticks and
sermons, 33(8), 21-58
Vernon, R. (2017). International investment and international trade in the product cycle.
In International Business, 11(6), 99-116
Choudhary, A., & Mausom, M. (2017). Conservation of Cultural Heritage: The Necessities,
Trends, and the Analysis of Current Practices. In Understanding Built Environment,
25(7), 15-28