4.1.6 - contd

Question 1

what are embargoes

Answer 1

• an official ban on tradevor other commercial activity with a particular country
• less about protecting domestic firms but instead abt politics or enforcing laws
• e.g US embargo on il from iran and tehran

Question 2

how does subsidies to domestic providers act as protectionism

Answer 2

• allows firsm to gorw and act on global scale
• lower proudction costs, competitive prices intl and nationally,
• exporting firms maintain employment, tax revenue, income
• mitsubishi given subsidies to compete on itl level

Question 3

what are administrative barriers

Answer 3

• procedure or legal requirement that can inhibit trade if set in an arduours manner e.g excessive paperwork require to import
• customs procedures like valuations, inspections - increase red tape measures to reduce quantities of import

Question 4

other trade restrictions

Answer 4

• reduce value of a currency so import are more expensive

Question 5

impacts of protectionism on consumer

Answer 5

● There are higher prices for consumers as they are unable to buy imports at the
cheaper price. It tends to raise the price of domestic producers since goods and
services needed for the production of these goods may also suffer from import
controls and it limits the competition for domestic producers so they have less
incentive to be efficient.
● Moreover, they suffer from less choice

Question 6

impacts of protectionism on producer

Answer 6

● Domestic producers benefit from import controls (less competition) so can sell more goods at a higher price than otherwise and they will benefit from measures to increased exports.
● However, they may suffer from higher costs if there are controls on the imports
they need for production.
● Foreign producers will lose out as they are limited in where they can sell their
goods. Inefficient, domestic producers are kept in production, whilst efficient, foreign
ones lose out

Question 7

impacts of protectionism on workers

Answer 7

● little difference to employment figures.
● It can be argued that allowing inefficient firms to close would be better for workers in the long run. The market would reallocate resources and create new jobs, with greater security.
● Following the steel tariffs imposed in America in 2018, it is estimated that 16 jobs will be lost elsewhere for every job gained in the steel industry. (The Economist)
● However, Argentina have been successful at implementing tariffs which protect jobs (better job security and wages)

Question 8

impacts of protectionism on gov

Answer 8

● In the short run, governments benefit from protectionist policies as they can gain
tariff revenues and they are politically popular.
● However, it can lead to an inefficient economy which stifles growth

Question 9

impacts of protectionism on equality

Answer 9

• It has a regressive effect on the distribution of income as the rise in price affects the poorer members of society far more than the well off as it is they are no longer able to afford the products.

Question 10

impacts of proteci

Answer 10

● As the tariff diagram shows, the imposition of import controls results in deadweight welfare loss.
● It also causes trade wars since the introduction of restrictions often leads to
retaliation by other countries. A recent example of this is the US-China trade war,
where each country continues to impose more tariffs on the other’s goods. This
causes a reduction in trade and a reduction in growth