Assume that the European Union passes a new trade policy that will only allow trade with South American countries that pass environmental laws that are the same as those of member countries in the EU
The argument that is made is that this will provide a level playing field for the EU in competing with South American nations in international trade. Critically evaluate this argument.
This may seem like a way of making a level playing field but it may just be a trade restriction in disguise. South American countries are not likely to be able to comply with such a demand. The reason is that they are poorer relatively speaking compared to member nations of the EU. A clean environment is a normal good whose demand increases with the economic prosperity of the country. This doesn't sound like a good policy.
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In a marketplace, prices:
A) act as a measure of value, and do not affect the allocation of resources. B) act as incentives that allow for the efficient allocation of resources. C) are determined by politicians and regulators. D) are determined through auctions.
If the interest rate on student loans ________, students will ________
A) falls from 6 percent to 1 percent; not change their saving but will change their investment B) rises from 6 percent to 12 percent; increase their consumption before it becomes too expensive C) rises from 6 percent to 12 percent; increase their saving in order to pay back the loan sooner D) falls from 6 percent to 1 percent; increase their saving in order to pay back the loan sooner E) None of the above answers is correct.