Question

3. Define the four basic types of trade barriers and give some examples of the arguments in favor of protectionist policies.

Answer 1

The trade barrier is the government's restriction on the free international exchange of goods or services - the government may use a variety of means, such as taxation, licensing, and other restrictions. The four basic trade barriers are Tarrifs,Non tariffs,Voluntary export restrains and Import Quatas.These trade barriers are adopted by the government.

The government has the following arguments for playing down the protectionist argument.

a) Preservationism policy to protect a particular industry or product .For example: coal, petroleum, agricultural products.
b) The government is advocating the protection of new industries For eg: some industries have only recently started and therefore need transparency
c) The government is raising the protectionist claim to protect employment. E.g., domestic employment

d) The protection argument against dumping. Dumping means selling in foreign markets for a lower cost of production. Its goal is to conquer the market
This protectionism is also used by the government to encourage exports and to identify the source of government revenue.The government needs to implement such protectionist policies for the economic growth of the country.