International trade Essay Example | Topics and Well Written Essays - 1500 words - 2

International trade - Essay Example Tariffs and quotas allow domestic industry to reap more profits than it would do under free trade. Pertinently tariffs and quotas are fairly transparent, when compared to other forms of trade interventions (Kenen, 2000: 177). However, loss to the economy and society from the protection of tariffs and quotas is higher as the loss to the consumers exceeds the gain of the producer. According to the US Department of Labor, protectionism destroys eight jobs in general economy for every one saved in the protected economy (Miller and Elwood, 1998). Free trade, on the other hand, encourages nations to manufacture only those commodities in which they have specialization thus creating more and better job opportunities. Cross-national trade, thus, makes the rates of goods more competitive and allows goods to be shipped and traded internationally. Tariffs and quotas decrease the choice of goods for the consumers and raise the cost of doing business. Trade protectionism impedes economic growth, a nd its costs are far higher than its benefits. Apparent similarities apart, there are major conceptual and practical differences between quotas and tariffs. There is a general non-equivalence between tariffs and quotas. Quotas restrict the import of commodities, into the home country, in a given period of time. Through a quota, a country directly decreases the import of goods. It is a protectionist regime employed to benefit a few importers, and producers, of a particular commodity. Quota can also be referred to as the quantitative restriction on the import of goods. Kenen (2000:176) argues that quotas also provide an absolute limitation on the volume of imports. There can be a total ban of import of quantities exceeding the quota or they can be subject to a high duty rate. Transparency in the quota system is far less than that in tariff system. Normally, quotas are allocated without any