Question One
Sugar is an important produce based on the farming of sugarcane, primarily on a large scale. The USA is a major producer of sugar and has many large sugar plantations as well as sugar processing industries. As with any large-scale crop, the growing of sugar requires a massive investment, so is the processing thereof, which must be done within the proximity of the farm. Yet, some countries, perhaps due to the economy of scale or government policies have developed means to produce massive amounts of sugar at exponentially lower prices (Feenstra & Taylor, 2017). If this product was allowed to flood the American market, the local manufacturers would be unable to compete with the pricing, leading to the collapse of the American sugar industry. It is on this basis that a quota is given to ensure that the only sugar that comes is the difference between what is manufactured and the market demand.
I would have to agree with the policy for providing a quota for sugar imports. Tradeoffs and opportunity cost are some of the most important economic considerations kindred to international relations. Every country seeks to encourage its allies to purchase as much of its available exports as possible (Feenstra & Taylor, 2017). Yet, the same country will also seek to minimize adverse effects of imports made on its domestic industry so as to protect the local industry. For example, the labor market in the USA cannot be compared with that of Brazil, a major sugar producer. It would, therefore, be unfair to expect American sugar producers to compete with Brazilian producers.
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Question II
The obligation of the government to protect local producers from the adverse effects of lower pricing can also come at a very expensive local cost. This is also a major consideration within the tradeoff and opportunity cost created by the careful balancing act that is international affairs (Feenstra & Taylor, 2017). A plausible example of this complexity would the US cotton industry. Because of several local factors, US grown cotton may be lower than in the international market. A rule that only local cotton be used in the industries would be important to protect and boost local cotton farming. The opportunity cost for the same would, however, to exponentially harm industries than manufacture cotton products. These industries would be expected to purchase raw materials at exponentially higher prices yet be able to compete in the local and international markets with other manufacturers who are purchasing raw materials at lower rates. Indeed, the industries would be looking at a possibility of running out of business.
There are several plausible responses that these industries would give to the US government. First, they might demand compensation for the purchases of raw materials they make so that their raw material expenses be cushioned by this compensation. This would enable the industries to compete favorably with their international competition. Secondly, the US has one of the largest apparel markets in the world but a good segment of the same goes on imports. The manufacturers could demand a quota restriction for cotton based product imports into the USA so that they can capitalize on the local markets. Finally, the manufacturers may demand to be allowed to export their manufacturing plants to other countries so that they can effectively use the cheaper raw materials available in those countries. Unfortunately, this would cripple the cotton industry that the government would be trying to protect. The response that the government should not and cannot expect is a positive or docile one from this manufacturers as their businesses are directly threatened.
Reference
Feenstra, R. C., & Taylor, A. M. (2017). International trade (4th ed.). New York, NY: Worth
