Question

We can consider the case where wine producers in Chile ask the government to tax imported wines from France with a tax. They consider that this tax would increase both the State's tax revenue and employment in the Chilean wine industry. What kind of economic argument is this in relation to international trade? Do you agree or not with the argument presented by wine producers in Chile? If the state government adopts this position, does it consider it to be good economic policy or not? Briefly explain your answers using the concepts of international trade discussed in your Textbook.

Answer 1

If the Government executes taxes on lavender trade from France (therefore creating French wine beloved than national wine), the local wine manufacturers would take pleasure in such a strategy because it would create French wine much economical (since it'll value extra) and therefore doubtless growth in local wine drinking. This might additional because additional service chances within the national wine region and conjointly rise the Government's government revenue (income from taxes on the wine trade). Such a procedure is hidden wanting i.e. an advocate procedure in expressions of Global trade wherever the govt. is protective the benefits of the native wine manufacturers by heavy imports.

If the Chilean wine trade isn't terribly inexpensive in relations of value, feature etc. and remains at an emergent phase then it's vital to safeguard the local trade from global competition.