Helping out small businesses

            Together with the promotion of international trade as the main way to achieve economic growth through participating in regional trade blocs, the collapse of the domestic production process most commonly ensues, especially for small businesses. The governments within each country thereby face a dilemma. On the one hand, they wish to protect and stimulate industry. On the other hand, they want to provide their citizens with the best quality goods at the lowest possible prices and therefore participate in regional trade blocs to achieve this. Governments have used a variety of trade barriers to protect small businesses and to achieve other social and political goals as well. Governments restrict trade by complex customs formalities, high taxes for domestic importers so that they would choose local raw materials instead, etc. A frequently applied device is the tariff, which is a duty of tax imposed on goods moving into or out of the country. Tariffs raise the price of imported goods, prompting some consumers to purchase less-expensive, domestically produced items.

Governments can also use non-tariff barriers to give small domestic businesses a competitive advantage. Examples of no-tariff barriers include unilateral or bilateral import quotas; import bans; overly restrictive safety, health or manufacturing standards; environmental laws; complicated and subsidies to small businesses. For instance, the United States passed the Export Administration Act of 1979, amended in 1985 and 1988, which restricts the flow of technologically advanced goods and data from the United States to other countries. The Act has been in lapse since August 1, 2001, but the President has extended control over exports by invoking his emergency powers under the International Emergency Economic Powers Act (U.S. Department of Commerce, 2008). Nonetheless, to assist small businesses, countries generally encourage exports through the use of export incentives and export subsidies. These trade restrictions are imposed to stimulate exports or restrict imports in order to protect small businesses, promote employment, ease a balance of payments problem or foster industrialization.

WORK CITED

U.S. Department of Commerce. (2008). Bureau of Industry and Security. Retrieved October 26, 2008 from http://www.bis.doc.gov/eaa.html.