Trade Barriers Made By European Union Economics Essay

Posted on

The intent of this thesis is to find and analyze what are the trade barriers that are made by European Union. Hence, the proposal rubric is named as “ What are the trade barriers that are made by European Union to protect its markets from foreign rivals and who can be affected by these barriers? A instance survey of Turkish Company ( Eczacibasi Corporation ) ”

2. Introduction

What is meant by the Trade Barriers?

Trade Barrier is defined as any authorities policy or ordinance that restricts international trade. It is the manner which is used to protect the domestic market from foreign rivals in footings of authorities policies, regional trade understandings, legitimacy, growing and protectionism e.g. it is used to assist local houses export and therefore construct worldwide market portion by making such things as supplying them with subsidies in the signifier of revenue enhancement interruptions and low involvement loans. Other common grounds include:

Protect local occupations by screening home-country concern from foreign competition.

Promote local production to replace imports

Protect baby industries that are merely acquiring started.

Reduce trust on foreign providers.

Promote local and foreign direct investing

Reduce balance of payments jobs.

Promote export activity

Prevent foreign houses from dumping ( selling goods below in order to accomplish market portion )

Promote political aims such as declining to merchandise with states that pattern apartheid or deny civil autonomies to their citizens.

( Rugman and Collinson 2006 ) In my proposal, it will be examined how European Union usage its Trade Barriers Regulation to protect its market against rivals. Turkish market is the 1 of the rivals in footings of Trade Barriers Regulation and European Union governmental policies in trade part. To protect its domestic market and to maintain up labour those barriers are used efficaciously to derive success against foreign rivals.

3. Background

Covering with trade barriers to merchandise in the international trading system does non hold a long history. Until late it was mostly underweighted comparison to other more seeable trade barriers such as duties and quotas. Liberalization attempts in the context of the General Agreement on Tariffs and Trade ( GATT ) for illustration, typify this way. Technical Barriers to merchandise issue was brought into GATT docket in 1973. Agreement on Technical Barriers to Trade ( TBT ) , which was concluded, and a portion of the World Trade Organization ( WTO ) bundle signed by all WTO members. ( hypertext transfer protocol: //www.wto.org/english/tratop_e/tbt_e/tbt_e.htm )

Importers have monolithic troubles in obtaining needed proficient statute law of the importation states. Responsible governments for duties and quotas are by and large national ministries of foreign trades, and sometimes custom bureaus. Technical ordinances, nevertheless, may be formulated, implemented and supervised by different national governments, including local authoritiess, such as National Health, Environment, Agriculture, Industry and Labour Agencies. Technical demands are besides broader, they may include, environment, public safety, wellness, labour related issues every bit good as merchandise criterions. They can be prejudiced: conformity of criterions and ordinance is typically more dearly-won for foreign manufacturers and importers than that for domestic manufacturers. ( Baldwin 2001 )

The European Union has ever been an of import trading spouse of Turkey. Trade dealingss with the EU has accounted for approximately half of Turkey ‘s imports and exports. Its exports to the EU states in 2001 accounted for $ 16 billion, which was about 51 per centum of its entire exports of $ 31.5 billon. In the same twelvemonth, the value of Turkey ‘s import from the EU was $ 26 billon, 44 per centum of its entire import. As of 1999, Turkey is the EU ‘s 7th biggest export finish and 13th biggest exporter to the EU. A Customs Union covering industrial merchandises was officially established between Turkey and the EU in 1995. Turkey is among the states where the brotherhood has the highest trade excess. The imposts brotherhood would farther open and consolidate the Turkish market for Community manufacturers. All duty and non-tariff barriers might be eliminated. Community exporters will therefore gain discriminatory and free entree to this immature and largely not concentrated market of about 70 million consumers ( Allen2000 ) .

Most obvious dynamic addition for the Turkish manufacturers will be generated from economic systems of graduated table due to two facets of the riddance of proficient barriers. First, as Maskus and Wilson ( 2001 ) indicate, “ common criterions and ordinances can advance economic systems of graduated table by allowing manufacturers to settle on a limited scope of merchandise features or procedures. Sector that had been segmented by variable criterions can be rationalized by greater end product graduated table. “ Second, as noted above, proficient harmonisation will advance integrating of the Turkish merchandises non merely with the Community markets but besides planetary 1s. As market gets bigger, fixed costs of production get smaller. Exploiting the economic systems of graduated table will ease Turkish merchandises to accomplish international fight.

Acknowledging this, the ultimate aim of this survey is set as to research deductions of trade barriers in Turkish Company which is known Eczacibasi Corporation. Founded in 1942 by Dr. Nejat F. EczacA±baAYA± , the EczacA±baAYA± Group takes its name from the honorary rubric “ main druggist ” , conferred on the male parent of Dr. EczacA±baAYA± at the bend of the last century. EczacA±baAYA± is a outstanding Turkish industrial group with 39 companies, 9,200 employees and a combined net turnover of $ 3 billion in 2008.

EczacA±baAYA± ‘s nucleus sectors are constructing merchandises, health care and consumer merchandises. Additionally, the Group is active in finance, information engineering, welding engineering and land development. In Turkey, EczacA±baAYA± is the leader in most of its concerns and has distribution webs for edifice merchandises, agricultural merchandises, pharmaceuticals and fast-moving consumer goods that are among the strongest in their sectors. Internationally, EczacA±baAYA± is best known for its flagship VitrA trade name, a powerful rival in planetary bathroom and tile markets. It is besides a major exporter of tissue paper, welding electrodes, electronic smart cards and industrial natural stuffs such as clay and felspar. International partnership is a cardinal constituent of the EczacA±baAYA± Group ‘s growing scheme. EczacA±baAYA± has nine international joint ventures and legion cooperation understandings with taking international companies. All of these are grounded on the rule of long-run common benefit, based on house concern standards and ethical concern patterns.

The EczacA±baAYA± Group ‘s mission is to be a innovator of modern, high quality and healthy life styles. Consequently, the Group encourages each of its companies to excel established criterions in their sectors and raise consumer benchmarks of merchandise and service quality. Through sponsorship and responsible corporate patterns, it besides promotes societal and economic development that nurtures cultural and scientific activity, protects the environment and conserves scarce natural resources ( hypertext transfer protocol: //www.eczacibasi.com/channels/1.asp? id=141 ) . Eczacibasi Corporation is one of the biggest pharmaceutical merchandises and agricultural merchandises supplier in Turkey. Harmonizing to European Union Trade Barriers Regulation, this group and some other companies from Meleagris gallopavo, have got exporting jobs to the European Union states due to miss of quality, utilizing inexpensive natural stuffs which are exported from 3rd states to Turkey, deficiency of enfranchisements, utilizing incorrect informations whilst administering merchandises to the European Countries and so on. After subscribing Customs Union understanding ; Turkey saw some betterments in those countries and will be traveling on to better to catch European Union criterions in footings of European Union Trade Barriers Regulation. ( Arvius 2005 )

4. AREA OF RESEARCH

This chapter is intended to bespeak the purposes and aims of the thesis

4.1 Aim

The purpose of the thesis is to find what are the barriers that made by European Union to protect its market.

4.2 Aims

To specify trade barriers on a commercial sense

To understand the mounting importance of the authoritiess ‘ policies on trade barriers

To find the cardinal function played by an appropriate direction of trade barriers in companies

To cast visible radiation on the importance of the trade barriers in international trade, redefining the term of barriers on industrial base

To supply an penetration into analyzing the prevalent authorities and international policies

To measure to what extent the corporations have been impacted by the barriers confronting across the universe

To discourse over whether the trade barriers might be attributable to export and import

So as to stress on the importance of trade barriers, to measure the cardinal function played by ordinances and statute laws

Determine the appropriate trade barrier techniques applied by the authoritiess that seem to hold succeeded in siting out the recession by agencies of robust manage

To find of inappropriate trade barrier techniques embraced by the E.U authoritiess that have failed to fight with covering with the 3rd states.

5. Justification

The nucleus grounds why I focus on the affair of what are the barriers in the European Union are followed:

In order to procure cognition of trade barriers which affected trade between Turkey and European markets, I desire to analysis the issue comprehensively. I believe that I will harvest the benefit from this work in my future calling. Therefore I believe that I will be able to get by with the thesis demands. Equally, I might be provided with accurate information as to the subject, since I have contacts within company that are likely to help me in procuring more dependable information.

Hence, I would wish to analyze over this issue. Meanwhile, as I strive to procure accurate and indifferent information, I am be aftering to hold interviews with persons that are likely to lend to the promotion of the thesis, holding interviews with me. Acerate leafs to state, these interviews will be unprecedented experience for me.

6. LITERATURE REVIEW

Trade Barriers

International trade increases the figure of goods that domestic consumers can take from, decreases the cost of those goods through increased competition, and allows domestic industries to transport their merchandises abroad. While all of these seem good, free trade is n’t widely accepted as wholly good to all parties. Trade barriers are used to protect domestic employment, consumers, baby industries, national security and for revenge ( Countries may besides put duties as a revenge technique if they think that a trading spouse has non played by the regulation ) . ( Mcdermott and Taggart 1993 )

Government imposed limitation on the free international exchange of goods or services. Trade barriers are by and large classified as import policies reflected in duties and other import charges, quotas, import licensing, imposts patterns, criterions, direct procurance by authorities, subsidies for local exporters, deficiency of right of first publication protection, limitations on franchising, licensing, engineering transportation, limitations on foreign direct investing, etc. hypertext transfer protocol: //www.businessdictionary.com/definition/trade-barrier.htm at 10.37 14.12.2009.

Normally used barriers are: Price-based barriers ; it is based on the value of the goods. Tariffs rise grosss for the authorities, discourage imports, and do local goods more attractive. The most common is the import duty, which is levied on goods shipped into a state. Less common is the export duty, for goods sent out of the state, or pass through duty for goods go throughing through the state. Second, measure bounds, frequently known as quotas, restrict the figure of units that can be imported or the market portion that is permitted. For illustration European Union limits Nipponese car imports to 10 % of the entire market.

Third, sometimes a host of international houses will repair monetary values or measures sold in an attempt to command monetary value and it ‘s known as trust. A well-known illustration is OPEC. By commanding the supply of oil it provides, OPEC seeks to command both monetary value and net income. Fourthly, non-tariff barriers are regulations, ordinances, and bureaucratic ruddy tape that hold or prevent the purchase of foreign goods. These barriers limit imports and protect domestic gross revenues. ( Collinson and Rugman 2006 ) .

Duties are crystalline and are typically based on the value of the merchandise or service. Generally, duty rates are comparatively low today, particularly among developed states. With overall duties low, authoritiess frequently attempt to switch a merchandise into higher duty class while houses develop schemes to profit from the lower duty class. For illustration, The European Union imposes a 288 % duty on imported veggies, which is geared toward protecting the farm anteroom in the Union. Quotas are quantitative restrictions on the importing of goods typically spelled in footings of units or value. Non-tariff barriers are obstructions to merchandise, non anchored in Torahs and official ordinances and hence are non crystalline. Since, they are non crystalline, they may be much more hard to react to and offer an advantage to domestic concerns. ( Luo and Shenkar 2004 )

Duties are implemented for two clear economic intents. First, they provide gross for

the authorities. Second, they improve economic returns to houses and providers of resources to domestic industry that face competition from foreign imports. Duties are widely used to protect domestic manufacturers ‘ incomes from foreign competition. This protection comes at an economic cost to domestic consumers who pay higher monetary values for import viing goods, and to the economic system as a whole through the inefficient allotment of resources to the import viing domestic industry. ( Gandelfo 1998 )

Non-tariff barriers to merchandise are considered as authorities Torahs, ordinances, policies or patterns that either protect domestic industry or merchandises from foreign competition or unnaturally stimulate export of peculiar domestic merchandises. Quantitative limitations, duty quotas, voluntary export restraints, orderly marketing agreements, export subsidies, authorities procurances, import licensing, antidumping/countervailing responsibilities and proficient barriers to merchandise are some illustrations of such non-tariff barriers. Non-tariff barriers besides include a broad assortment of operating patterns runing from bureaucratic holds in treating petition for licenses, political bickers, “ buy national ” runs, substructure concerns and unethical concern patterns. Such steps constitute non-tariff barriers and are frequently justified from the position of public policy, i.e. , the demand to protect human wellness and safety, to protect baby ( domestic ) industries and the environment. ( Low et al 1999 )

On the other manus, Czinkota and et Al ( 1996 ) indicate that there are literally 100s of ways to construct a barrier. A few of the trade barriers that exporters face, restrictive licensing, particular import mandate, impermanent prohibitions, progress import sedimentations, excise responsibilities, ingestion revenue enhancements, state quotas, wellness and healthful prohibitions, foreign exchange licensing, service charges, turnover and internal revenue enhancements an etc.

7. Methodology

7.1. Overall Approach

In this chapter, it is intended set out my attacks to carry throughing the ends of my thesis. The main work- watercourses associated with informations aggregation consist of an extended literature reappraisal and primary informations aggregation provided by interviews and questionnaires.

Methodology moves on to look at the information analysis, being followed the likely hazards that might impede the thesis in progressing will be stated.

Research can be categorized three different ways on the footing of intent. These are:

Descriptive

Casual

Exploratory ( Zikmund, 2000 )

Descriptive research

By and large talking, the intent of descriptive research is to specify feature of a phenomenon. Descriptive research is concerned with supplying the replies to who, what, when, where and how inquiries,

Casual research

The major purpose of insouciant research is determine cause and consequence between variables. Therefore, it is common to hold an outlook of the relationship to be described.

Exploratory research

The cardinal end of the explorative research engages in contracting the extent of the research subject and transforming the ascertained issues into defined 1s. Simultaneously, the researches that are acute on determining the constructs can analyze bing surveies associated with the subject, and besides talk to separate and knowing persons.

Furthermore, the research workers might be informally analysis the state of affairs, explorative research is aimed to let the research worker to detect a phenomenon.

This thesis is aimed to supply apprehension of barriers to merchandise and its singular facets. With regard to the research intent, I regard my survey as exploratory. This thesis intends to look into the construct through supplying the research inquiry.

In the literature, there are two recognized methods to transport out a research. These are named as qualitative and quantitative methods. Disparities between the methods can be defined as the tabular array shows below.

Beginning: Yin, 1994, Case Study Research, Design and Methods, P.6

So long as the research worker want to roll up and look into detailed informations. They largely apply qualitative method. In other words, the end of qualitative method is preponderantly to obtain more comprehensive apprehension of a phenomenon. Since the nature of the research implies a deeper analysis so as to supply sufficient informations, qualitative method will be exploited.

With regard to primary research schemes are classified as experiments, study, archival analysis, histories and instance surveies.

Taking research schemes into history are by ground of singular abilities of instance survey and archival analysis to bring forth replies to the inquiry “ why ” , “ what ” , and “ how ” . These mentioned schemes guarantee the research worker to derive implicit in apprehension of the context of the modern-day events ; I will therefore exploit these schemes for my thesis.

7.2 Data Collection Methods:

Data aggregation is conducted by two ways. These are secondary and primary informations aggregation. Primary information is defined as the information that is provided by the research worker so as to obtain a specific information, whereas secondary informations asserts the information that have already been provided.

After finding research scheme the 2nd measure is choice a sample, so as to derive an all- embrace understand of the construct of trade barriers how used in the trade between Turkey and European Union states. The first phase of my methodological analysis will hence be to transport out an extended reappraisal of all the relevant literature. Similarly, at this phase the cardinal literature will prosecute with the following countries:

Review of publications associating to merchandise barriers, for case, articles, diaries and books that are concerned with international trade barriers.

So as to look into the construct accurately and sufficiently, it is wise to obtain an in- deepness apprehension of the issue. In other words, the prevailing statute laws and ordinances in international trade and the companies that have been covering with the impacts of these statute laws and ordinances will be examined. Furthermore in order to enrich the research, the recent events will be analyzed related international trade ordinances and statute laws. Simultaneously, the fiscal times web sites and relevant trade parts of BBC, Yahoo and CNN web site will be exploited to underpin the issue.

Furthermore, for agencies of supplying an penetration into the attacks of the Turkey authorities and European Union Commission policies will be examined. In add-on, whereas the policies have continued to impact ferociously export and import between European Union and Turkey. Hence, to procure more dependable farther information as to the recent fortunes, authorities publications on web sites will be followed.

So as to obtain primary informations, I will try to keep interviews with a figure of directors that work in the company. Therefore, prior to interviews, I will make a short series of inquiries to inquire. However, even though I would prefer to hold one-to-one interviews, the directors might be given to avoid keeping interviews. Hence, it is likely that I might hold interviews on the phone, or most likely through the e- mails.

7.3 Data analysis

The thesis will use two different analyses. First, it will debate over a figure of interviews with section directors of the company in Turkey. Second, it will analyze certifications associated with the predominating trade conditions. Afterwards, I will compare the gathered informations provided by the interview and certifications with my conceptual model and the current theories associating to the subject. Prior to showing the findings, both similarities and disagreements between theory and the retrieved informations will be examined.

7.4 Resource Requirements

The reappraisal of literature and certification associated with the subject of my thesis will be gained from library and electronic diaries installations.

By agencies of telephone and the cyberspace, the interviews which I will do with international trade experts who works within the Eczabasi Corporation in Turkey will be held or they will be asked to react questionnaires one-to-one or via electronic mails.

7.5 The likely hazards

The hazards identified:

It may be hard to obtain the accurate and appropriate information, doing an interview with the section directors. Hence, I will try to do some interviews with acknowledgeable persons who are capable of guaranting me to obtain the appropriate information my thesis necessitates.

Due to obstructions to obtaining informations, my proposed timetable might steal. So as to discourage any hold in supplying informations, I will seek to decently pull off clip I have been given.