4.1.6 restrictions on free trade

reasons: protecting domestic industries

• Govs may impose trade restrictions to shield domestic industries from foreign competition.

• This is often done to prevent job losses + maintain national self-sufficiency in critical sectors.

reasons: national security

• Trade restrictions may be used to safeguard national security interests.

• The X of certain techs/Gs cld be restricted to prevent them from falling into the wrong hands.

reasons: infant industry argument

• Govs may protect emerging or "infant" industries until they can compete internationally.

• Temporary trade barriers, like tariffs, can provide domestic industries time to grow + become competitive.

reasons: anti-dumping measures

• They r imposed when foreign companies sell products below their CoPs in the domestic market, harming domestic producers.

• These measures protect local industries from unfair competition.

reasons: environmental + health concerns

• Restrictions may be enacted to prevent the M of products that don’t meet domestic environmental or health standards.

• Ensures imported Gs meet safety + quality requirements.

reasons: BoPs

• Trade restrictions can be used to improve a country's BoPs.

• Reducing Ms t thru tariffs/quotas can help reduce trade deficits.

types: tariffs

• They r taxes on imported Gs.

• They increase the cost of imported products, making them less competitive compared to domestic alternatives.

types: quotas

• They set a limit on the Q of a specific product that can be imported.

• They directly control the vol of Ms, often to protect domestic producers.

types: subsidies to domestic producers

• Govs provide financial support to domestic industries, reducing CoPs.

• Subsidies make domestic Gs more competitive in both domestic + international markets.

types: non-tariff barriers

• These are various measures other than tariffs that restrict trade.

impact of protectionist policies: consumers

• -ve impact: Protectionist policies often lead to higher prices for imported Gs due to tariffs/quotas.

• +ve impact: In some cases, domestic industries may become more competitive, offering better products.

impact of protectionist policies: producers

• +ve impact: Protectionism can shield domestic industries from foreign comp, helping them survive + grow.

• -ve impact: Over-reliance on protection can lead to inefficiencies, reducing competitiveness in the LT.

impact of protectionist policies: govs

• +ve impact: Govs can generate revenue through tariffs.

• -ve impact: Protectionist policies may strain diplomatic relations + lead to retaliation by trading partners.

impact of protectionist policies: SoL

• Protectionism can impact living standards by affecting the availability + affordability of Gs.

• It can protect jobs but may reduce consumer choices + increase prices.

impact of protectionist policies: equity

• Protectionism can exacerbate income inequality if it benefits specific industries/groups while imposing costs on others.

• It may also affect global income distribution by limiting opportunities for developing countries to X.