Restrictions on free trade (L3)

Question 1

free trade

Answer 1

trade with no restrictions

Question 2

protectionism

Answer 2

restricts free trade

Question 3

reasons for trade restrictions

Answer 3

please push that pole right now
public safety
protect domestic industries
tax revenue 
prevent dumping
retaliation
national security

Question 4

national security

Answer 4

eg America- Trump thinks China will weaken US defence capabilities so is trying to stop using their tech etc

Question 5

public safety

Answer 5

protect public from harm

Question 6

tax revenue

Answer 6

developing countries see tariffs as an important source of revenue, administrating it is easier than income tax as there are big informal sectors in developing countries

Question 7

infant industry

Answer 7

industry new to a country but is established in other countries

Question 8

protect domestic industries

Answer 8

tariffs make imports more expensive so domestic stuff becomes more attractive but this means less efficiency as less competition but this is hard as there’s corruption and lack of export discipline

Question 9

retaliation

Answer 9

to punish/convince the other country to remove trade restrictions/serve as a warning

Question 10

dumping prevention

Answer 10

exporter sells below production costs bc of excess capacity or can’t find a buyer / drive out domestic competition to dominate market but it’s difficult to prove there’s dumping and is often used as an excuse

Question 11

methods of protectionism

Answer 11

sea qt
subsidies
embargo
administrative barriers
quota
tariff

Question 12

tariff

Answer 12

tax on imports/exports

Question 13

quota

Answer 13

limit on imports allowed into the country

Question 14

subsidies on domestic producers

Answer 14

encourage firms to grow so they can compete, enables lower production costs which means more employment income n tax revenue

Question 15

embargo

Answer 15

ban on trade with a particular country
gov wants imports to reach a certain standard to keep consumers safe so prices will be higher
increase in paperwork to import a good would increase production costs for an importer
ban imports completely even if they’re legal to purchase domestically eg oil from Iran in America

Question 16

administrative barriers

Answer 16

the product goes through multiple custom procedures (inspections,valuations) so more of these checks can be an obstacle to imports

Question 17

export discipline

Answer 17

firms using state protection and still doing well in exporting goods are rewarded with further subsidies but failing ones are given less support as punishment

Question 18

export discipline’s impact on producers

Answer 18

advantage over foreign competitors

Question 19

export discipline’s impact on workers

Answer 19

protection benefit from job security and higher wages but some industries require lots of imports so raw materials etc become more expensive so costs go up so the firm may reduce labour/ go out of business

Question 20

export discipline’s impact on consumers

Answer 20

they suffer from protectionist measures as they limit choice

Question 21

export discipline’s impact on gov

Answer 21

more revenue for developing countries than developed and can be used to win political support