Page 124 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes Japanese policymakers are far less autonomous and less insulated from interest groups than is implied
by those who characterize it as a strong state. As Kent Calder argues, “Japan’s system of medium-
size electoral districts forces as many as five members of the largest political parties ... to run against
one another in the same electoral district.... As a result,... legislators tend to be highly sensitive to
constituency pressure, especially from relatively well-organized grassroots pressure groups such as
agriculture and small business.” A primary foreign policy interest of these groups is the prevention
of the loss of domestic markets to imports, and this has led them to form alliances with politicians
and bureaucrats that are likely to undermine the insulation and autonomy of these state actors.
Going a step further, it is useful to consider the results presented in light of this discussion of Japanese and
U.S. institutions. In 1986, for example, Japan and the United States were the two largest states in our
sample, both countries had appreciated currencies and relatively little unemployment, and neither state’s
electoral system was PR. From the standpoint of our model, the primary difference between them was
that the United States had noticeably more constituencies than did Japan. As a result, it would be expected
on the basis of this model that Japanese policymakers would be somewhat better insulated and more
autonomous than their American counterparts, and that this institutional feature would better enable
them to pursue the national interest. It, therefore, is not surprising that the incidence of NTBs was greater
in Japan than in the United States during 1986. At the same time, however, both Japanese and U.S. NTBs
were relatively high in 1986 based on the sample of countries considered here. This is consistent with the
view described above that, while Japanese policymakers are vested with greater institutional capacity
(and therefore are better able to advance the national interest as they see it) than their American counterparts,
the institutional characteristics of Japan and the United States are more similar than is often recognized.
Clearly, the cases presented in this section can be taken as no more than suggestive of the ways in which
societal and statist factors influence trade policy. Yet these examples do illustrate why the variables
emphasized in our model are so strongly related to cross-national patterns of NTBs.
Self -Assessment
1. Choose the correct option
(i) Protecting domestic producers against import competition:
(a) Helps those producers.
(b) Helps domestic consumers of the product.
(c) Probably helps the importing nation as a whole.
(d) All of the above.
(ii) A nontariff barrier operates by:
(a) Limiting the quantity of imports.
(b) Increasing the cost of getting imports to market.
(c) Creating uncertainty about the conditions under which imports will be permitted.
(d) All of the above.
(iii) One of the reasons that protectionists and government officials may favor using a quota
instead of a tariff is:
(a) Quotas generate more revenue for the government than do tariffs.
(b) A quota ensures that the quantity of imports is strictly limited.
(c) Quotas create less market distortions than do tariffs.
(d) Quotas give less power to politicians than do tariffs.
(iv) A quota:
(a) Causes domestic prices to fall.
(b) Causes world prices to rise.
(c) Restricts the quantity of a good that can be imported.
(d) Is always more efficient than a tariff.

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