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A2 Economics and Business The purpose of tariffs, laws and import quotas. By Mrs Hilton for revisionstation. Lesson objective. To be able to define tariffs, laws and import quotas To be able to answer past paper questions on the topic. From the spec.
By Mrs Hilton for revisionstation
2. Import Quotas
even among those with excellent relations. Countries put up barriers
to trade for a number of reasons. Sometimes it is to protect their
own companies from foreign competition. Or it may be to protect
consumers from dangerous or undesirable products. Or it may even
be unintended, as can happen with complicated customs procedures.
Tariff barriers have been reduced considerably over the past few
decades but other obstacles remain. Getting rid of unnecessary trade
barriers would give a great boost to global economic welfare. Discuss.
During the period between the First and Second World Wars there were unusually high tariffs between countries, which reduced the volume of world trade. When peace was re-established following World War II, representatives of 44 countries met at the United Nations Monetary and Financial Conference in New Hampshire, to discuss the rebuilding of Europe and issues such as high trade barriers and unstable exchange rates. The outcome was an agreement (referred to as the Bretton Woods Agreement) outlining an international system of free trade, convertible currencies, and fixed exchange rates. As part of the Bretton Woods Agreement, the GATT was established in 1947 to reduce barriers to international trade between nations. Under the GATT, countries met periodically for negotiations, called “rounds,” to lower trade restrictions between countries. Each round is named for the country in which the meeting took place. The Uruguay Round of negotiations, which lasted from 1986 to 1994, established the World Trade Organisation (WTO) on January 1, 1995.
Knowledge 2, Application 2, Analysis 2
Knowledge: up to 2 marks are available for describing what a tariff is and/or saying what it is used for, e.g. a tariff is a tax placed on an import to increase its price and decrease its demand
Application: up to 2 marks are available for relating the above
India and giving two reasons as to why they might be imposed e.g. to protect Indian cosmetic businesses from outside competition or to raise revenue for government spending
Analysis: up to 2 marks are available for developing the reasons
e.g. giving infant industries a chance to grow without being swamped by foreign competition thus preserving much needed employment or that an increased stream of revenue may be useful for the Indian government in order to fund investment in infrastructure and aid economic growth.