Monday, February 27, 2006

Would prices of imported goods be regulated?

Similar to any other transferable security, the Import Certificate’s market price is regulated by supply and demand. The certificates are only issued to exporters of goods from the USA that choose to pay the assessment expense fees. The supply is effectively determined by foreign demand for USA goods. Certificates surrendered for goods imported into the USA are ‘retired”. Regardless of how low the certificate's market price falls, the USA could never (unlike tariffs) suffer a trade deficit of goods. Demand for certificates are determined by the USA consumers demand for imported goods. The exporter’s profits from resale of the certificates are an additional cost to USA’s consumers of imported goods and a subsidy of USA’s exported goods.

If foreign producers should ever considers the certificates to be "overpriced", they may (directly or indirectly) export goods from the USA and ship them anywhere else in the world in order to obtain certificates. They may also choose to accept a lower profit margin rather than abandon their share of the USA market. The certificate’s price is not directly dependent upon the gap between USA and foreign production costs.


Blogger Captain America said...

This is a unique proposal that I have not heard of elsewhere. It will require some thought. The one objection I have thought of is the size of the agency that would be necessary to produce and track the trade permits. I don't want to focus on the negatives at this time though, as I haven't taken alot of time to consider your proposal. I suppose the government entity issuing and retiring permits wouldn't have to be much bigger than an agency recording value of goods imported for terrifs, though the workload would be twice... to track exports as well, and log the issue of the permits.

8:22 AM  
Blogger supposn said...

National security requires that our nation be aware of everything and everyone entering our nation. To the extent that we're failing to do so, our nation is now at risk.

A byproduct of this proposal is we'd have an economic inducement and a non-government souece of revenue to accomplish what we are now failing to do. We're failing to monitor our ports of entry.

You correctly note that the cost of montoring both imports and exports is double the expense of only exports. Bear in mind that the cost paid by exporters of manufactured goods who choose to profit from acquiring the IMPORT permits.

Exporters could elect not to pay. Their goods will leave the USA uninspected and no permits will be issued.

Respectfully, Supposn

8:24 PM  

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