6.2 Free Trade & Protectionism

Free trade
> e__ of t__ b__ = c__ large o__ m__ for g__/services

elimination, trade barriers, creates, open markets, goods

Protectionism
> r__ of t__ w/ other n__ to p__ d__ f__
> limits u__ f__ t__ conseq

restriction, trade, nations, protect domestic firms, uncontrolled free trade

Uncontrolled free trade leads to
Ø  L__ of j__ for workers in __s (firms o__)
Ø  Rapid ↓n__/scarce resources
Ø  ↑c__ change via t__ goods
Ø  Worker e__ (LEDCs)
Ø  ↑g__ between rich & p__ countries (inequality)

loss, jobs, MEDCs, outsource, natural, climate, transporting, exploitation, gap, poor

Protectionism
1. T__
> i__ t__ on price of i__ good = d__ c__, e__ d__ ver

tariffs, indirect tax, imported, discourage consumption, encourage domestic

Protectionism
2. S__
> sum of $ paid to d__ p__ = less c__, encourage s__

subsidies, domestic producers, costs, supply

Protectionism
3. i__ q__
> l__ on total q__ of product that can be i__ = limit S = ↑i__ costs

import quotas, limit, quantity, imported, import

Protectionism
4. e__
> total b__ on i__ good

embargo, ban, importing

Reasons for Protectionism
>  Protect local & i__ (emerging) industries, giving c__ to d__
>  Protect d__ (sunset) industries (could lead to large u__)
>  Limit over s__ where countries have ↑c__ adv.
> Correct t__ i__ (balance between imp. & exp.)

infant, chance, develop, declining, unemployment, specialisation, comparative, trade imbalance

Reasons Against Protectionism
Ø  Restricts c__ c__
Ø  Restricts new r__ & e__ opport.
Ø  Protects i__ firms
Ø  Other countries can r__

consumer choice, revenue, employment, inefficient, retaliate

Free Trade Agreement (FTA)
Ø  Shows r__ for how c__ treat each other when t__
= e__ trade, ↑profitable

Ø  Removes tariffs, ban subsidies, simplifies customs, easier for businessppl to travel between

rules, countries, trading, efficient