Protectionism

Protectionism refers to government policies that restrict international trade to help domestic industries. Protectionist policies are usually implemented with the goal to improve economic activity within a domestic economy, but can also be implemented for safety or quality concerns.

Winners

• Governments - Through tax revenue from tariffs
• Domestic Firms
• Workers - More jobs
• Protected industries, such as agriculture

Losers

• Consumers (Higher prices)
• Firms that import lots of goods and services

Examples of Protectionism

• Tariffs - Import taxes
• Quotas - Limits on how many imports of a certain good are allowed in
• Embargoes - A total ban on an import good
• Intellectual property laws
• Preferential procurement policies
  • Governments favour local producers for infrastructure projects etc.
• Export subsidies - Payments to encourage domestic products by lowering their costs
  • Common Agricultural Policy in the EU
  • Cotton subsidies for US Farmers

Benefits

• Infant Industry Argument
• Sunset Industry Argument
• Protecting Strategic industries
  • Agriculture
  • Military
• Anti-dumping duties
  • Dumping is where they are sold for export at less than the market price in the country being exported to.
    • India complained of China and Thailand dumping bus and truck tyres
    • Anti-dumping duties prevent prices from crashing, and can be prevented with Quotas