4.1.6 Restrictions On Free Trade ✅

Question 1

What are the reasons for trade restrictions?

Answer 1

• Infant industry argument.
• Job protection.
• Protection from possible dumping.
• Protection from unfair competition.
• Terms of trade.
• Danger of over-specialisation.

Question 2

Why is infant industry an argument for trade restrictions? Where has this worked? What is a negative of this?

Answer 2

Infant industry = newly established therfore need time to build up and cover sunk costs. (Aren’t competitive). Temp barriers can give indsutries time to grow.
Japan
Firms can grow to be inefficient.

Question 3

How does restriction on trade protect jobs?

Answer 3

• Allowing imports will mean that domestic firms lose out to internationals thus less jobs.

Question 4

How does restriction stop dumping? Example?

Answer 4

Dumping is when a company w surplus g/s sell them to another area at extremely low price harming domestic suppliers. (Can’t compete).
China put tariffs on steel tubes from eu to stop dumping.

Question 5

How do tariffs protect from unfair comp?

Answer 5

Domestic producers may not be able to produce with firms that have low labour costs or regulations or heavy gov subsidy.

Question 6

Why might protectionism be good?

Answer 6

Danger of over-specialisation which is more encouraged with free trade. Protectionism can prevent firms/consumers becoming reliant on foreign firms.

Question 7

What are the types of restriction?

Answer 7

• Tariffs.
• Quota.
• Subsidising domestic producers.
• non-tariff barriers (licensing, standards, regulations).

Question 8

What is a tariff? Draw the diagram? What does it overall show?

Answer 8

Taxes imposed on imported goods.
That tariffs help domestic producers, raise gov rev and reduce money leaving w imports but are inefficient as they cause a deadweight loss.

Question 9

What are quotas? Add a diagram?

Answer 9

Limits placed on level of imports. (Forced to buy domestically)

Question 10

Explain subsidies to domestic producers?

Answer 10

Gov can provide support through reducing production costs making them more competitive.

Question 11

What are non-tariff barriers?

Answer 11

• Licensing requirements.
• Technical standards.
• health and safety requirements.

Question 12

What is protectionism?

Answer 12

Shielding domestic industries by limiting open trade.

Question 13

Impact of protectionism on consumers?

Answer 13

✅ = domestic industries maybe become more competitive and offer better products.
❌ = often lead to high prices of imported goods.

Question 14

Impact of protectionism on producers?

Answer 14

✅ = can shield domestic industries and let them grow/survive.
❌ = over-reliance can lead to inefficiencies + lower long-term competitiveness.

Question 15

Impact of protectionist policies on governments?

Answer 15

✅ = can generate rev from tariffs.
❌ = policies may strain diplomatic relations + lead to retaliation.

Question 16

What are the impacts of protectionist policies on livings standards?

Answer 16

✅ = can protect jobs.
❌ = may reduce availability/affordability of goods.

Question 17

What is the impact of a protectionist policies on equality?

Answer 17

• Can increase income inequality if it benefits spec industries but not others.
• May effect global distribution as developing countries opportunities to export may be limited.