European Exam

Trade barrier

A trade barrier is a general term that describes any government policy or regulation that restricts international trade. The barriers can take many forms, including:

Import duties

An import tariff or import duty is a schedule of duties imposed by a country on imported goods. It is paid at a border or port of entry to the relevant government to allow a good to pass into that government's territory.

Import licenses

An import license is a document issued by a national government authorizing the importation of certain goods into its territory. Import licenses are considered to be non-tariff barriers to trade when used as a way to discriminate against another country's goods in order to protect a domestic industry from foreign competition.

Export licenses

Import quotas

An import quota is a type of protectionist trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time. For example, a country might limit sugar imports to 50 tons per year. Quotas, like other trade restrictions, are used to benefit the producers of a good in a domestic economy at the expense of all consumers of the good in that economy.

Tariffs

A tariff is a tax on foreign goods upon importation. When a ship arrives in port a customs officer inspects the contents and charges a tax according to the tariff formula. Since the goods cannot be landed until the tax is paid, it is the easiest tax to collect, and the cost of collection is small.

Subsidies

In economics, a subsidy is a type of financial government assistance, such as a grant, tax break, or trade barrier, in order to encourage the production or purchase of a good. The term subsidy may also refer to assistance granted by others, such as individuals or non-government institutions, although this is more commonly described as charity.

Non-tariff barriers to trade

Non-tariff barriers to trade are trade barriers that restrict imports but are not in the usual form of a tariff. They are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict tariffs.

Voluntary Export Restraints

A voluntary export restraint (VER) is a restriction set by a government on the quantity of goods that can be exported out of a country during a specified period of time. Often the word voluntary is placed in quotes because these restraints are typically implemented upon the insistence of the importing nations.

Local Content Requirements

Most trade barriers work on the same principle: the imposition of some sort of cost on trade that raises the price of the traded products. If two or more nations repeatedly use trade barriers against each other, then a trade war results.

Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency, this can be explained by the theory of comparative advantage. In theory, free trade involves the removal of all such barriers, except perhaps those considered necessary for health or national security. In practice, however, even those countries promoting free trade heavily subsidize certain industries, such as agriculture and steel. Examples of free trade areas are: North American Free Trade Agreement (NAFTA), South Asia Free Trade Agreement(SAFTA), European Free Trade Association, European Union (EU), Union of South American Nations.

Other trade barriers include differences in culture, customs, traditions, laws, language and currency.

US Business Structures:

Corporations:

A corporation is a legal entity (technically, a juristic person) which has a separate legal personality from its members. The defining legal rights and obligations of the corporation are: (i) the ability to sue and be sued; (ii) the ability to hold assets in its own name; (iii) the ability to hire agents; (iv) the ability to sign contracts; and (v) the ability to make by-laws, which govern its internal affairs. Other legal rights and obligations may be assigned to the corporation by governments or courts. These are often controversial.

Most corporations are registered with the local jurisdiction as either a stock corporation or a non-stock corporation. Stock corporations sell stock to generate capital. A stock corporation is generally a for-profit corporation. A non-stock corporation does not have stockholders, but may have members who have voting rights in the corporation.

Different types of Corporation:

For profit & Non profit; Closely held & Public; Mutual Benefit Corporations; Multinational Corporations.

In the US:

Several types of corporations exist in the United States. Generically, any business entity that is recognized as distinct from the people who own it (i.e., is not a sole proprietorship or a partnership) is a corporation. This generic label includes entities that are known by such legal labels as $BAB(Bssociation$B!&(B $BAP(Brganization$B!&(Band $BAM(Bimited liability company$B!&(B as well as corporations proper. Only a company that has been formally incorporated according to the laws of a particular state is called $BAD(Borporation$B!&(B American corporations can be either profit-making companies or non-profit entities. Tax-exempt non-profit corporations are often called $B!&(B01(c)3 corporation$B!&(B after the section of the IRS Code that addresses their tax exemption.

Corporations are created by filing the requisite documents with a particular state government. The process is called $BEJ(Bncorporation$B!&(Band refers to the abstract concept of clothing the business entity with a veil of artificial person hood (of $BED(Borporating$B!&(Bit $B!&AD(Borpuus$B!&(Bbeing the Latin for $BEC(Body$B!&(B. Only certain corporations, such as banks, are chartered. The rest merely file their articles of incorporation with the state government as part of a registration process.

The federal government can only create corporate entities pursuant to relevant powers in the U.S. Constitution. For example, Congress has constitutional power to regulate banking, so it has power to charter federal banks. Additionally, Congress