the global economy (4.2)

trade protection

trade protection

a deliberate attempt by the government to safeguard domestic producers from foreign competition by use of barriers of trade

types of trade protection

1. tariffs

2. quotas

3. subsidy (export subsidy)

4. administrative barriers

tariffs

a special tax imposed on imported goods and services

• to discourage competition (imports)

• to raise revenue

• to protect domestic industries

non-tariff barriers to trade

• quotas

• voluntary export restrictions

• subsidies

• regulatory & technical standards

• government purchasing policies

quotas

quantitative restrictions on imports

subsidies

financial assistance to local firms to help them compete against foreign rivals by lowering the costs of production for domestic suppliers

• production subsidies

• export subsidies

production subsidies

help reduce the production costs for domestic firms

export subsidies

targeted at protecting specified export-oriented firms

administrative barriers

bureaucratic standards & regulations imposed on foreign firms in order to protect domestic firms/consumers

• embargoes

• exchange controls

embargoes

(administrative barrier)

bans on trade within a certain country

often due to political/economic disputes

exchange controls

(administrative barrier)

restrictions on the quantity of foreign exchange that can be brought or sold by domestic residents