- Protectionism
- Protectionism is government policy to reduce or block imports, usually to shield domestic producers and workers from foreign competition.
- Free trade
- Free trade is trade in which countries allow each other's imports without tariffs, quotas or other barriers set by government.
Arguments for protectionism
Can you name the five arguments most often made for restricting imports?
Each names a real worry. Governments also restrict imports to raise revenue or to cut a current account deficit. The question in every case is whether blocking imports is the best answer.
The infant industry argument is to block imports for a limited time, so a new domestic industry can grow before it competes on equal terms.
Can you think of an example?
A country with no battery makers shuts out imported batteries for a few years, hoping its own firms learn the skills and reach the scale to compete abroad.
The anti-dumping argument is to block imports that foreign firms sell below their cost of production, by taxing them up to that cost.
Can you think of an example?
Foreign steelmakers with too much capacity sell steel in the UK below what it costs them to make, and British producers ask for a duty to lift the price.
The jobs argument is that limiting imports keeps work in domestic industries that would otherwise lose sales to foreign firms.
Can you think of an example?
A town whose shoe factory is losing sales to cheaper imports asks for a tariff on imported shoes to keep the factory open.
The national interest argument is that a country should not depend on other nations for key products, such as fuel or defence materials.
Can you think of an example?
A government worries that in a war it could be cut off from imported gas, so it wants to keep a domestic supply going whatever it costs.
The standards argument is that imports made unsafely, or under weaker environmental rules, should be kept out to protect consumers or the planet.
Can you think of an example?
Imported toys found to contain lead paint are banned from sale, and some campaigners want goods from heavily polluting factories kept out too.