Resrtictions On Free Trade

Question 1

Reasons for restrictions on free trade

Answer 1

1. Protecting domestic/ infant industries: maintain self-sufficiency. Developer economies of scale to compete with internationally. Take away protectionist measures when they can compete. However when protecting these industries allowing room for inefficiency
2. Protected against low cost labour abroad
3. Protect domestic employment
4. Anti-dumping measures: prevents countries from selling at lower than their cost of production. The domestic industries where these are sold will be suffering. However hard to prove that a country is dumping
5. Environmental and health concerns: prevent the import of products that do not meet domestic environmental health standards
6. Balance of Payments: can reduce trade deficits
7. To raise government revenue (tariff)

Question 2

Tarrifs

Answer 2

Taxes imposed on imported good. Increase the cost, making them less competitive. Consumers need to pay more so puts them off paying

Question 3

Quotas

Answer 3

Set a limit on the quantity of a specific product that can be imported. Directly controls the volume of imports, often to protect domestic producers

Question 4

Subsidies to domestic producers

Answer 4

Governments provide financial support to domestic producers, reducing production costs. Make domestic goods more competitive for international markets

Question 5

Non tariff barriers

Answer 5

Licensing requirements, technical standards, health and safety regulations

Question 6

Impacts on protectionist policies: Consumers

Answer 6

Positive: In some cases, domestic industries may become more competitive, offering better products.
Negative: Protectionist policies often lead to higher prices for imported goods due to tariffs or quotas.

Question 7

Impacts of protectionist policies: Producers

Answer 7

Positive: Protectionism can shield domestic industries from foreign competition, helping them survive and grow.
Negative: Over-reliance on protection can lead to inefficiencies, reducing competitiveness in the long term.

Question 8

Impacts of protectionist policies: Governments

Answer 8

Positive: Governments can generate revenue through tariffs.
Negative impact: Protectionist policies may strain diplomatic relations and lead to retaliation by trading partners.

Question 9

Impact of protectionist policies: Living standards

Answer 9

Positive: Protectionism can impact living standards by affecting the availability and affordability of goods.
Negative: may reduce consumer choices and increase prices.

Question 10

Impact of protectionist policies : Equality

Answer 10

Negative: Protectionism can exacerbate income inequality if it benefits specific industries or groups while imposing costs on others. It may also affect global income distribution by limiting opportunities for developing countries to export.

Question 11

Anti dumping

Answer 11

Preventing the sale f products well below domestic prices.