a. Definition of the key term Special government agencies for international trade include the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA), and the European Union (EU) just to name a few. Several countries created the WTO to monitor all the trade around the entire world while the NAFTA and the EU where created on more of a regional level for promoting trade in those areas. The U. S. Department of Commerce developed the International Trade Administration (ITA) in order to stimulate economic opportunities for U. S. usinesses and their employees (Satterlee, 2009). b. Summary In his article, Get-Tough Policy on Chinese Tires Falls Flat, John Bussey sheds some light on to the tariff that the U. S. enacted in 2009 on Chinese tire imports. The tariff was meant to limit the import of passenger and light-truck tires and help give a boost to manufacturers and job creation in the U. S. As many of the opponents of the tariff point out, it has not added any substantial amount of jobs in the industry but has instead lead to higher prices due to the price of the tariff being passed down to the consumer.
In the first year the number of imports from China dropped nearly 35% but in reality it didn’t increase manufacturing here in the U. S. , instead the business moved to Indonesia, Thailand, and Mexico. One tire shop owner argues that prices have also increased for the U. S. made tire as well due to those manufacturers using the cover of the tariff to raise their prices across the board. c. Discussion The U. S. International Trade Commission agreed with the complaint against China that was filed by the United Steelworkers union and recommended the tariff.
The ITC was created to help stimulate economic opportunities for U. S. businesses which I am sure that they felt they were doing when they enacted this tariff but it has not worked and needs to be carefully thought thru before any extension. The prices of the tires have increased and no substantial amount of jobs has been added that can be tied back to the enactment of the tariff. The tires being imported from China were primarily lower-cost tires and U. S. manufacturers tend to focus more the higher-profit tires that don’t directly compete with the imports from China.
Why try to block the trade of something that is not directly competing with the bulk of your business anyway? Some people are always going to want to buy cheaper things and blocking it does not make them want the more expensive thing. The consumer will look for something else similar in price and if you do not provide it in that price range they will find it somewhere else just as they did in Indonesia, Thailand, and Mexico. d. References Satterlee, B. (2009). Cross Border Commerce. Roanoke: Synergistics Inc. Bussey, J. 2012, January 20). Get-Tough Policy on Chinese Tires Falls Flat. Retrieved January 31, 2012, from The Wall Street Journal: http://online. wsj. com/article/SB10001424052970204301404577171130489514146. html In His article, John Bussey discusses the tariff enacted by the U. S. International Trade Commission on the import of Chinese tires into the U. S. He helps us to understand the intention of the trade tariff, why it does not seem to be working and why the ITC has a big decision to make whether or not to extend it.