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IB ASSIGNMENT 1

By: - Rohan Aggrawal Pavan Dave Nirav Gor Ankit Pathak Chintan Vyas Dhavan Vyas
1. Do you believe that the Bush administration was correct in imposing tariffs in March 2002 on a wide range of steel imports? A-1. The tariffs imposed on foreign steel are killing relations between the United States and the rest of the world, and although the domestic steel industry might be helped by these tariffs, the rest of the macro economy of the United States is suffering because of these tariffs. Therefore, these tariffs need to be lifted before foreign countries impose tariffs of their own against the United States, and other solutions must be found to address the unemployment and loss of private consumption caused by weaknesses in the domestic steel industry of the United States. LOSS OF ECONOMIC OUTPUT, INCREASED TRADE RESTRICTION and INCREASED UNEMPLOYEMENT will be caused due to such step. There will be no free trade and higher rates and unfair trade practices will be followed by other nations which will result into unfair trade practices which is a crime as per the section 201. so imposing tariff may prove as safety for domestic steel producer but overall economy will suffer a great loss due to such step taken by the president and for this situation he cannot go on for importing tariffs on a wide range of steel imports. 2. Who are main beneficiaries of protective tariffs such as those imposed on steel imports?

A-2. Imposing of Tariff on Imports is like a political "safety valve Main beneficiaries due to the imposing of trading will be none other than the political party, the ruling President and up to some extent it will be a beneficial situation for the Domestic Players as their Product will be of low cost and even there would be more chances of unfair trade in domestic markets i.e. Players who are supporting the Party may have a beneficial situation and can full their pockets within time. 3. Does the action of WTO in this case represent a loss of U.S. national sovereignty? Why do you think the WTO sided with the EU? A-3.WTO is having a primary job of regulating trade i.e. fair trade practices and also to look at all international and enforcing the agreement was signed by the nations included in WTO Pact. So imposing of duty on import by US government was opposed in U.S and 15 members of the European Union with seven other nations complained to the WTO. Even Japanese Government highlighted the legal flaws of the US action under the dispute settlement mechanism. Chinas Ministry of Foreign trade said it would reserve the right to appeal the U.S steel safeguards to the WTO. South Korean government said that these actions were threatening to the integrity of the World Trade Organization. So, after this all the voice were raised WTO framed a Panel to look after it and they had given one document to US government with 8 Articles, but in response US failed to provide a reasoned and adequate explanation of how the facts supported its determination with respect to increased imports. There was a fear of trade between the nations leading it to a trade war between countries so WTO Ordered US to bring its safeguard measures found inconsistent into conformity with its obligations under those Agreements. So they had to lift the import trade duty. No side was taken by WTO they had done the fair work what they were supposed to do. 4. If all the tariffs on international trade in steel were removed, and subsidies to steel exporters around the world were banned, who would benefit?

A-4:- The net beneficiary of such a move would be steel consumers worldwide. They would enjoy the most competitive prices industry can offer. Even the Nation producing more ore will be benefited more than the other nations.

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