Theme4:1.6:Restrictions on free trade Flashcards
what are the 6 reasons for restrictions?
-Infant industry argument
-Job protection
-Protection from potential dumping
- Protection from unfair competition
-Terms of trade
-Danger of over specialisation
explain job protection as a reason for restrictions.
Governments may be concerned that allowing imports will mean
domestic producers will lose out to international firms, and so there will be job losses within the country.
what are the types of restrictions on trade?
tarrifs
quotas
subsidies to domestic producers
non-tariff barriers
tariffs
taxes places on imported goods which make them more expensive to buy
tariff diagram
quotas
limits placed on the amount of goods that can be imported
quota diagram
subsidies to domestic producers
funds given to producers which helps them to lower their costs and make them more internationally competitive
non tariff barriers
embargos-complete ban on imported goods
import licensing - when a country/firm needs a license to import goods
legal and technical standards- certain goods can’t be imprted due to laws e.g. the EU has high standards which is a main restriction on trade from outside the bloc
impact of protectionist policies on consumers.
higher prices
less choice
impact of protectionist policies on producers.
+:sell goods at higher prices
-foreign producers can lose out
could increase cost of production if goods are imported from abroad
impact of protectionist policies on government
+:they can gain tariff revenue
-:can cause ineffecieny in the economy
impact of protectionist policies on living standards.
can cause a deadweight welfare loss
trade wars due to retaliation e.g USA-China trade war-each country imposed more tariffs on each others goods
impact of protectionist policies on equality.
it has a regressive effect on income distribution as riding prises affect poorer people more than rich.
