The years 2013 and 2014 have showed a unique utilization of trade-manipulating instruments among different countries across the globe. Putting into consideration the devastating effects of the economic depression, various countries are trying to bring their economies back to feet using trade-manipulating instruments such as taxes and incentives.
Taxes and incentives have historically been used by different economies to control trade. For instance, tax incentives may be applied for renewable sources of energy to encourage the use of renewable sources of energy for a sustainable future. In this relation, energy forms an integral aspect of the economy. Production and transport solely depend on energy and as such, the USA government throughout 2013 installed various energy related incentives to discourage dependence on foreign oil, reduce emission of green house gases as well as urban emissions. For instance in 2013, the federal government extended a 50% tax incentive to users of gasoline and natural gas. This had an overall effect of encouraging production of gasoline in the United States and at the same time, encouraging consumers to embrace the use of gasoline over other sources of energy both for industry and transport. The federal government through this incentive intended to reduce over-reliance on foreign oil as well as reducing environmental pollution. As the USA government tried to recover from the effects of a devastating economic depression, this initiative assisted in reducing oil exports from oil producing countries and boost local gasoline-producing companies.GDP growth and hence economic growth hugely depends on the level of disposable energy used and oil growth. Fuel and hence oil is the engine behind the growth of every economy in the world. As shown from the graphical analysis below, increased use of disposable energy leads to a decreased pace of economic growth. Therefore, the use of gasoline was a move aimed at reducing the amount of disposable energy and hence stimulating both industrial and economic growth.
Graph: A comparison of the GDP growth against disposable energy
Stock piling of reserves in foreign states: The struggle for economic supremacy among nations has led to development of a trade environment characterized by unfair competition. This has been prevalent among the nations that feel that they should own a higher stake in negotiating power and they have resulted to measures that seek to eliminate competitors in the market. The case of china and America struggle for supremacy in the control of global markets provides a substantial belief that the modern day global trade has lost its ethics of trade as competitors are not just outdoing one another but also doing all they can to phase each other out. China for instance has resulted to piling of stock reserves in less developed nations and creating bilateral ties that would make all American products extremely expensive when compared to the same products offered by the Chinese. This makes it very hard for competing firms from the American market to infiltrate into such regions and offer significant competition. While in control of such reserves, the Chinese investors have all but secured the market now and in the future thus barring any infiltration by other investors from competing economies worldwide.
Theft of Intellectual and technological rights: As nations bear the brunt of extremely powerful completion in global market, there has been a high level of innovation amongst manufacturers. However, this has not gone without its challenges as manufactures have found themselves at logger heads with other competitors. This has occurred where a company discovers that part of its brand products are trading under another brand name, with little or no significant alteration from the original product. While there are international trade laws that govern intellectual property, there has been little response as states defend their manufactures or offer their support based on vested interests. The German model of Volkswagen is one that has been under such circumstances. A Chinese model of Cherry car was found to have similar attributes to the Volkswagen which prompted German chancellor Angel Merkel to seek assurance from Chinese investors that the next model of Volkswagen will not face a similar competing product from the Chinese automobile manufacturers. The intellectual and technological theft has come to a point whereby the affected parties have resulted to call out for roundtable negotiations which in most cases end up without an amicable solution. International regulations on protection of property and intellectual rights have not borne any fruits considering the cutthroat competition prevalent in the global market. The purpose has been to phase competing manufactures out especially through offering cheaper but similar products. These events have worked to undermine manufactures from less developed nations who cannot afford to trade their goods at cheap prices considering the high costs of production. Thus developing nations have been pushed to the periphery as large economies compete to gain their interests.
