Wednesday, January 4, 2012
Targeted trade barriers ?
You are an employee of a Canadian firm that produces personal computers in Thailand and then exports them to Canada and other countries for sale. The personal computers were originally produced in Thailand to take advantage of relatively low labour costs and a skilled workforce. Other possible locations considered at the time were Malaysia and Hong Kong. The Canadian government decides to impose punitive 100 percent ad valorem tariffs on imports of computers from Thailand to punish the country for administrative trade barriers that restrict Canadian exports to Thailand. How should your firm respond? What does this tell you about the use of targeted trade barriers?
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