Final answer:
Marketers can have lower costs by shipping unassembled goods to an FTZ because of savings in customs duties, taxes, and transportation costs. The unsafe consumer products argument can prevent imports without typical retaliatory measures or economic downsides of tariffs. Specialization and trade between countries take advantage of lower opportunity costs and enhance economic efficiency.
Step-by-step explanation:
By shipping unassembled goods to a Free Trade Zone (FTZ) in an importing country, marketers can typically have lower costs for several reasons. FTZs are designated areas where goods can be imported, handled, manufactured or reconfigured, and re-exported without the intervention of the customs authorities. In other words, goods entering an FTZ are not subject to the customs requirements. This can lead to savings in customs duties and taxes, as well as reduced regulatory requirements.
Additionally, when goods are shipped unassembled, they often take up less space and are lighter, which leads to lower shipping costs. Moreover, transporting unassembled goods to locations near uncrowded freeways or where rail or water transport access is available can reduce transit times and expenses. This overall reduction in transportation costs and delivery times enhances cost-effectiveness and competitiveness.
The unsafe consumer products argument could be more effective as a strategy from the perspective of the importing country than using tariffs or quotas to restrict imports because it plays on consumer safety concerns. This type of argument is likely to gain public support and can be used to justify trade restrictions without resulting in the typical retaliation that tariffs might provoke. It also avoids the negative economic impacts that tariffs and quotas can have, such as increased prices for consumers or supply chain disruptions.
Trade between countries, such as the example of Mexico and the United States, allows each country to specialize in products with lower opportunity costs. Mexico can produce more shoes, a product with a lower opportunity cost there, and trade for U.S.-produced refrigerators, which have a lower opportunity cost in the United States. Such specialization and trade enhance overall economic efficiency and resource allocation.