Trade, Protectionism, and the Developed Countries

TRADE, PROTECTIONISM AND THE DEVELOPED COUNTRIES

The World Trade Organization refers to an organization formed in 1995 with a stated goal of supporting and liberalizing international trade. Although it is in line with free international trade it allows governments to impose short term protectionist measures under specific circumstances (Shrybman, 2001). Developed countries have imposed remarkable protectionist measures since 1975 despite the fact that they have joined WTO (Takatoshi and Krueger, 1993). An example of protectionism justification is Russia, which represents one of the strongest developed economies worldwide and is a recent WTO member since August 2012. The effects of its membership can be characterized as largely disappointing at least in the short term due to various reasons. According to the ministry of economic development of the Russian Federation, imports reported a substantial increase in the first half of 2013, while trade turnover and exports dropped significantly. As a result, the Eurasian Economic Commission, applied protectionist measures against agricultural combine harvesters and light commercial vehicles from several countries (Seeger, 2013). Therefore in the case of Russia protectionism is seen favourably up to the time being. Furthermore, a remarkable example of a developed country taking protectionist measures is that of the US against imports from China. The US has taken protectionist measures in 2013 in order to shield against patent infringement and trademark infringement by imported goods from China. The US International Trade Commission has conducted section 337 investigations which refer to quasi-judicial trade measures against various Chinese electronic companies. Here it should be noted t...

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...riers”. Moreover, the tacit knowledge model is being supported by the argument that when individuals come together under conditions which force them to share their ideas, knowledge gains are realized by the organization (Dixon, 2000). Therefore, collaboration between international companies and their local partner creates a unique opportunity for firms who want to expand internationally with respect to tacit knowledge gains. A remarkable example is the joint venture formulated by General Motors and Toyota in 1984 in order to co-manufacture cars in California. For Toyota, the main benefits were the acquisition of knowledge and experience with regards to U.S production patterns and the understanding of US labour management practices which proved very useful for the company when it started its manufacturing operations in the US a few years later(Clegg et al, 2011).