Types of Trade Protection and Economic Integration

Question 1

What are the four main types of trade protection?

Answer 1

Tariffs

Quotas

Export subsidies

Administrative barriers

Question 2

What are tariffs?

Answer 2

Taxes on imports.

Question 3

What are quotas?

Answer 3

Physical limits on the amount of imports.

Question 4

What are administrative barriers ?

Answer 4

Regulations like health/safety that complicates the import process.

Question 5

3 reasons for trade protection.

Answer 5

Prevent dumping
Protetct infant industries
Fix trade deficits

Question 6

Types of Economic Integration (From weakest to strongest)

Answer 6

Preferential Trade Agreement (PTA)
Free Trade Area (FTA)
Customs Union
Common Market
Monetary Union

Question 7

Why Do Countries Integrate?

Answer 7

Bigger Markets = More trade, more profits
Trade Creation = More efficient trade within the bloc
Economies of Scale = Lower costs for firms

Question 8

Why Is It Not Always Great To Integrate?

Answer 8

Loss of Control = National govs lose power over monetary & trade policy

Trade Diversion = Shift from better non-member suppliers to worse member ones

Certain industries may collapse after the removal of trade barriers > structural unemployment.

Question 9

Functions of the WTO.

Answer 9

Promotes Free Trade
Resolves Disputes
Monitors Trade Deals

Question 10

Issues with the WTO.

Answer 10

Big countries often ignore rules.
LEDCs get pushed around in negotiations.