Economics For 12.8

Question 1

Arguments against trade protectionism

Answer 1

1. Lost benefits of free trade (…)
2. Other countries will retaliate with trade barriers. A trade war may develop. The result is higher prices and fewer goods and services will be traded.
3. The government may protect inefficient domestic firms, leading to inefficient resource allocation.
4. The loss of domestic jobs from overseas competition will only be temporary.

Question 2

The definition of trade protectionism

Answer 2

Trade protectionism (贸易保护主义) involves protecting domestic industries from foreign competition. It restricts free trade and the methods used often seek to increase domestic industries’ relative price competitiveness.

Question 3

Arguments in favor of trade protectionism

Answer 3

1. To prevent dumping (dumping argument)
2. To protect Infant (sunrise) industry
3. To protect declining (sunset) industry and employment
4. To remove a balance of payments deficit
5. To improve terms of trade
6. To prevent overspecialization and diseconomies of scale
7. To raise revenue for the Government through tariffs