Recently, European banana producers felt their livelihood at risk because of the increasing presence of bananas from the third countries in the EU.According to the article, there are two main reasons lead to this situation. First, the EU continued to reduce the import tariffs of bananas from third countries.the world price was increased which lead to large amount of bananas come into European market from the third countries. Also, the bananas from the third countries are able to enter European market in a relative lower price which may damage the internal banana industry. Second, the lack of insistence to the food safety and easing phytosanitary regulation made it possible for bananas from the third countries accessed the EU at much lower price.
As we learnt in the classes, one of the best way to solve this problem is to increase the banana import tariffs. After the rise of tariff, the world price may go down while the internal price may go up. It will hurt consumers because consumers have to pay more money for the same amount of bananas. However, both government and European banana producers are better off due to the increasing internal price of bananas. And the EU's terms of trade will also increase since the import price is decrease. Seemingly, the EU will gain from the increasing tariffs, but it is depended by which part is larger, the loss of consumers or the gain of government and banana producers. In other words, it is depended by how much amount of tariffs that the government will take. And we can't ignore the impact of the tariffs from the third countries' government.
In my opinion, it is hard to say who is the winner or loser during the trade. Every countries' government will take several trade policies to protect their trade environment. And international organizations will also take measures to keep balance among the member countries. These policies and measures will be changed periodically. so it is meaningful for us to know the original reasons why these policies and measures should be used, so that we are able to be the winner in most time.http://www.freshplaza.com/article/115236/Europe-Reduction-of-banana-import-tariffs-puts-Pl%C3%A1tano-de-Canarias-in-danger
As we learnt in the classes, one of the best way to solve this problem is to increase the banana import tariffs. After the rise of tariff, the world price may go down while the internal price may go up. It will hurt consumers because consumers have to pay more money for the same amount of bananas. However, both government and European banana producers are better off due to the increasing internal price of bananas. And the EU's terms of trade will also increase since the import price is decrease. Seemingly, the EU will gain from the increasing tariffs, but it is depended by which part is larger, the loss of consumers or the gain of government and banana producers. In other words, it is depended by how much amount of tariffs that the government will take. And we can't ignore the impact of the tariffs from the third countries' government.
In my opinion, it is hard to say who is the winner or loser during the trade. Every countries' government will take several trade policies to protect their trade environment. And international organizations will also take measures to keep balance among the member countries. These policies and measures will be changed periodically. so it is meaningful for us to know the original reasons why these policies and measures should be used, so that we are able to be the winner in most time.http://www.freshplaza.com/article/115236/Europe-Reduction-of-banana-import-tariffs-puts-Pl%C3%A1tano-de-Canarias-in-danger
We'll you are right that tariff should increase but only when an optimal tariff can be achieve by increasing the tariff. I personally feel as a consumer wanting to have low prices off a product even if the product is from an international country so I would say I disagree with increasing or putting back in place the tariff and hope that the internal industry be able to find a way to compete or switch industries.
ReplyDeleteIn my opinion, I do not agree to increase European import tariffs. The first reason is that the positive TOT cannot offset deadweight loss if import tariffs are high. Thus, it will result in overall loss. Second, when customers in the EU need to pay higher prices, they may prefer to buy other kinds of fruits instead of bananas, which also will have bad effects on banana producers. Therefore, I think the EU should take other measures. For example, they can improve their technology, helping them reduce costs and selling price. During this process, they can enhance competitiveness. What's more, the government can offer production subsidy. Although the government will lose, both customers and producers can gain. When they gain, the government can get more taxes from them.
ReplyDeleteI don't agree to add European banana tariffs. Initially, the overall welfare for the EU will fall. Secondly, The equilibrium of domestic supply and demand can turn by itself. For example, the foreign producers and domestic consumers are very sensitive to the sale price of bananas, some small wholesalers will dislike that low price so they may exit from European market. the general market(government) does not have to intervene the price of bananas by using extra tariffs.
ReplyDeleteAdding high banana tariffs would help banana producers in the EU, but hurt consumers by raising prices. The government would also gain from the tariff revenue and a deadweight loss will be produced. If the tariffs are at the optimal tariff level, this could be beneficial for the countries. However, if the tariffs are too high, the deadweight loss will exceed the government revenue and therefore the tariffs would definitely not be beneficial. I think it depends on who they want to help in this situation. A tariff would indeed help keep banana producers' revenues higher, but consumers are losing in this scenario. Opening trade would lower prices for consumers and the countries could specialize in different areas while importing bananas at a lower price than they could produce at on their own.
ReplyDelete