T1 Free Trade Protection 6 PPT Flashcards
What is trade liberalisation?
💡 The removal or reduction of trade barriers like tariffs, subsidies, and quotas.
What is the acronym for the benefits of trade liberalisation?
CIVIC-J (Consumption, Investment, Variety, Income, Competition, Jobs).
How does trade liberalisation impact consumption?
It allows countries to consume more by specialising and trading.
How does trade liberalisation impact inflation?
Imports lower prices, reducing inflation.
How does trade liberalisation impact variety?
Allows access to goods a country cannot produce efficiently.
How does trade liberalisation impact income?
Creates more jobs, increasing real incomes and purchasing power.
How does trade liberalisation impact competition?
Forces domestic businesses to innovate, become efficient, and improve quality.
How does trade liberalisation impact jobs?
Creates higher-paying jobs in industries where a country has a comparative advantage.
What is trade protection?
Government policies that restrict imports to support domestic industries.
What is the acronym for the arguments for trade protection?
BADFINE (Balance of Trade, Anti-Dumping, Diversification, Foreign Labour, Infant Industry, National Security, Employment).
What is the balance of trade argument?
Restricting imports reduces trade deficits, but raises domestic costs.
What is the anti-dumping argument?
Dumping (selling goods abroad below cost) can drive domestic firms out of business.
What is the diversification argument?
Protection prevents reliance on a narrow range of industries.
What is the foreign labour argument?
Protects domestic industries from low-wage foreign competitors, but wages are linked to productivity.
What is the infant industry argument?
Protects new industries until they become efficient, but long-term protection reduces innovation.
What is the national security argument?
Protects essential industries in case of war, but overused to justify protectionism.
What is the employment argument?
💡 Shifting spending to domestic goods increases jobs, but raises costs for other industries.
