In: Economics
Q9 - (Arguments for Trade Restrictions) Explain the national defense, declining industries, and infant industry arguments for protecting a domestic industry from international competition.
Q10 - (Arguments for Trade Restrictions) Firms hurt by lower priced imports typically argue that restricting trade will save U.S. jobs. What’s wrong with this argument? Are there ever any reasons to support such trade restrictions?
9. Keeping in view the strategic importance of certain industries it is argued that since they are related to national defense, hence their protection of utmost importance arises during war when their output is necessary. The national defense argument claims these industries need to be protected from the foreign competition as in case of equipment that is instantly required for military operations. So, domestic producer is given preference due to military considerations. In case of the declining industries argument maintain that a provisional security be allowed so that there is organized tuning of a domestic industry which may be otherwise in risk of getting substituted by inexpensive or cheap imports. This provisional curb on imports is intended to reduce or protect the domestic economy from shock during the phasing out process. Similarly, the infant industry argument proposes safeguard to the infant industries being newly set up so as give them enough time to become adequately competent with respect to the foreign producers. These restrictions are also advocated to be provisional until sufficient economies of scale are developed in the domestic industry.