Introduction
The international trade is a complex process which depends on numerous factors. The policies introduced by the states regulate relations at the global level and ensure that the parties benefit from this sort of cooperation. At the same time, a country and a government should ensure that the exchange with third parties will not lead to the deterioration of the situation at the local level.
Importing foreign products might affect local producers and manufacturers and limit their development. For this reason, when designing the strategy for international cooperation, nations determine their local needs and how they should be met. Trade barriers can be viewed as a tool often used by a country to control the market of specific products. For instance, Taiwan has several trade barriers impacting its economy and global relations with other states.
Taiwan
Taiwan’s introduction of limits on certain goods is explained by its vision of the state’s development and current state. Thus, trade barriers can be described as specific regulations or policies introduced by the government to restrict international trade (Carbaugh, 2019). These might include specific tariffs, quotas, licenses, and other aspect that can be regulated (Carbaugh, 2019). In general, these can be viewed as the measure of protection created to ensure that local users and producers preserve their benefits (Carbaugh, 2019). Taiwan has special tariffs as a form of trade barrier to control its economy.
Furthermore, the governmental regulations impact agriculture and fish, as Taiwan banned the import of 42 items (United States Trade Representative, 2021). Moreover, beef, pork, and rice are also on the list of products that should be controlled (United States Trade Representative, 2021). Automobiles, motorcycles, distilled spirits, and some specific services, such as banking or television, are also banned (United States Trade Representative, 2021). These measures impact Taiwan’s relations with other states at the international level.
Causes for Trade Barriers
Several causes can explain the state’s decision to use trade barriers. First, Taiwan wants to protect its local producers and markets from mainland companies that might offer similar items at lower prices (Huang et al., 2021). As a result, it would lead to a reduction in the level of income of the residents, companies’ inability to compete with the bigger corporations, and the gradual decline of various spheres of industry (Carbaugh, 2019).
Second, the introduction of trade barriers might have political factors due to the Taiwan-China political opposition (Huang et al., 2021). Accepting China’s goods might increase the state’s dependence on its opponent and weaken its position (Huang et al., 2021). Furthermore, Taiwan has a specific economy strongly regulated by the government, which means that the emergence of third-party providers might impact the balance (Huang et al., 2021). For this reason, the barriers are used to control international relations with others.
Effects
The decision to use trade barriers by the Taiwan government leads to the emergence of several significant effects. Officially, these measures are viewed as anti-dumping, trade-relief, and technical barriers to trade necessary for revitalizing the local economy and making it more resilient (Huang et al., 2021). The barriers act as the protection imposed on imports because of the unfair price (Aggarwal, 2021).
Using both tariff and non-tariff barriers, Taiwan managed to address the challenges of the global financial crisis and manage the problem of weakened trade, which was the result of global economic fluctuations (Aggarwal, 2021). The barriers remain active and continue to affect the state’s trade with its partners and other countries. At the same time, there are numerous attempts to determine whether the accepted measures positively or negatively impact the economy and whether they should be prolonged.
Factors of Trade Barriers
The trade balance is one of the most important factors that should be considered when discussing trade barriers. As stated previously, the global crisis 2008 critically impacted the state’s trade and weakened it. The introduction of barriers was mainly linked to this factor and served as a protective measure. Thus, the country managed to save its economic activity uninterrupted and create the basis for its growth up to 3% during the COVID-19 crisis (Huang et al., 2021).
Moreover, the technological sector continued to grow, resulting from the practical policy aimed at regulating and preventing other nations and companies from interfering in their work (Huang et al., 2021). As a result, it is possible to admit the positive effects of trade barriers on the state’s trade balance and its ability to continue its development.
The situation with employment is another critical showing that should be discussed regarding the trade barriers and their effects. Taiwan currently reports an unemployment rate of 3.435, which is lower compared to 2022 (“Monthly unemployment rate,” 2023). This means the country does not suffer from the critical and adverse effects of trade barriers on its employment sphere. Moreover, by limiting the presence of foreign firms offering various services, the state saves vacancies for its citizens and avoids the growth of unemployed specialists. As a result, Taiwan manages to preserve the positive climate within its economy by offering its citizens a chance to find work and earn money.
Finally, economic growth strongly indicates whether the current policies are effective. In general, Taiwan can be considered an example of a fast and successfully evolving nation, proven by its stable economic growth (Huang et al., 2021). The primary indicators, such as the unemployment rate, income per capita, the average interest rate on deposits, and the consumer price index, evidence the health of the economy and the opportunities for further development (Huang et al., 2021). The barriers mentioned above do not cause adverse effects on the development indexes. At the same time, the trade with the partners impacted by the protectionist policies remains an effective tool to support the state’s further development and transformation into a potent international player.
Advantages and Disadvantages
Advantages
In such a way, it is possible to admit that the discussed trade barriers are a measure that guarantees the further development of Taiwan’s economy and its ability to resist external pressures. The case shows that there are some arguments for introducing trade barriers that might help economies to evolve. First, the measure protects the state from dumping and ensures domestic jobs are available for local people (Carbaugh, 2019). This factor is vital for Taiwan, which has a specific geographic location and can suffer from the income of specialists or cheap working force from other states, such as China (Aggarwal, 2021).
Furthermore, the barriers help to improve the trade deficit, which might be a severe issue for national economies, especially regarding the recent COVID-19 pandemic crisis and the disruptions in the supply chain observed nowadays. In such a way, the Taiwan government implemented an effective measure to guarantee that conditions are beneficial for the state’s economic development and the preservation of the speed of its growth.
Disadvantages
At the same time, there are some arguments against using trade barriers to protect the local economy. The fact is that trade barriers are not only border measures, but they should also be supported by interior policies and appropriate rules (Ting & Hsiao, 2020). As a result, although the situation is generally favorable, Taiwan experiences difficulties in imports and exports (Ting & Hsiao, 2020). Additionally, trade barriers might cause political tensions and potential trade wars (Carbaugh, 2019). For instance, China views trade barriers imposed by Taiwan as a political measure used to impact the relations between nations and acquire additional independence (Aggarwal, 2021). The reduced competition due to preventing the entry of goods from other countries might impact the situation in the local market and contribute to the formation of a monopoly. Taiwan might also have issues in interacting with its reliable partners, such as the USA, because of the trade barriers existing in the state and limiting cooperation with third parties.
Conclusion
Altogether, trade barriers might be viewed as a measure governments use for various purposes. It is supposed that by imposing barriers for import and limiting the financial operations or provision of special services, the country can support the protectionist policies necessary for its successful development. Taiwan has several barriers to the importation of specific products.
In general, the measure protects the local economy from negative impacts and helps it to recover and evolve. However, the researchers also admit that these barriers might be viewed as a source of political instability, customer dissatisfaction, and reduced imports, which is essential for the local economy. For this reason, there is a need for an effective policy to ensure that barriers are still met and to help the country remain robust.
References
Aggarwal, V. (2021). Taiwan’s trade policies. Strategies and constrains. The National Bureau of Asian Research. Web.
Carbaugh, R. (2019). International economics (17th ed.). Cengage Learning.
Huang, C., Hsu, C., Chiou, M., & Chen, C. (2020) The main factors affecting Taiwan’s economic growth rate via dynamic grey relational analysis. PLOS ONE,15(10), e0240065. Web.
Monthly unemployment rate in Taiwan from July 2021 to July 2023. (2023). Statista. Web.
Ting, C., & Hsiao, Y. (2020). Exploring solutions for the trade barriers in Taiwan. Advances in Management and Applied Economics, 10(5), 17-34. Web.
United States Trade Representative. (2021). 2019 national trade estimate report on foreign trade barriers. Web.
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