Which trade instrument has the European Union used to insulate its producers and consumers of agricultural goods from the impact of changing demand and supply conditions in the rest of the world?
A) domestic content regulations
B) variable import levies
C) voluntary export quotas
D) orderly marketing agreements

Question

Quizplus · Accepted Answer

Variable import levies are a type of trade instrument that allow a country to keep the domestic prices of agricultural goods constant even if the world prices change. The European Union has used variable import levies to insulate its producers and consumers of agricultural goods from the impact of changing demand and supply conditions in the rest of the world. These levies are adjusted according to the difference between the world price and the guaranteed price, which is the price at which the European Union guarantees to buy agricultural products from its farmers. By raising or lowering the levies, the European Union can keep the domestic prices of agricultural goods constant, protecting its farmers from fluctuations in the world market.

Which Trade Instrument Has the European Union Used to Insulate