International trade has become a significant part of mainstream business to day. Corporations have determined that outsourcing of merchandise is beneficial to the financial stability of the company. Natural resources that are readily abundant in one country may be in high demand for another country, therefore resulting in importation and exportation of goods and services.
What are the advantages and limitations of International Trade identified:
Rodamia's Domestic Production and Exports
List four key points emphasized:
Antidumping law is the difference between the domestic market price and the market price of the dumped product in a third country. In an effort to prevent opposing countries from importing goods at prices lower than the prices in their home consumer market the dumping of goods and lower than market rate has an adverse effect on the domestic market of the county that is importing said goods.
Level of Tariff ($/unit) 50
Imports for Suntize (million units) .25
Domestic Production (million units) 6.75
Implementation of the above changes in the tariff, the effect would be a charge that is higher than needed to equate the export price of watches in Rodamia in comparison to the market value of watches resulting in:
1. Watches sold in the importing country at a price less than the domestic price of watches
2. availability of watches at lower prices would cause material injury to the domestic industry in the importing country
Tariff level (%) 12
Imports from Uthania and Alfazia ($ in million) 28.99
Exports to Uthania ($ in million) 26.07
Exports to Alfazia ($ in million) 6.50
Rodamia's balance of trade ($ in million) 3.58
Tariff barriers between Rodamia Uthania and Alfazia become a cause for concern for the three countries.