Protection can be supported in the short term. Arguments can include infant industry, anti dumping and orderly run down. Against this is the case for free trade based on comparitive advantage. It can be argued that there are weaknesses in the application of the theory to the rel world.
4 Answers | Add Yours
Trade protection is justifiable in some cases, particularly when it comes to foreign firms dumping their products into a nation at an unreasonably low price, thereby causing a loss of sales to the domestic company and even forcing them to implement layoffs. I agree with the above post about trade protections sometimes being effective in the short term. Sometimes a fledgling economy needs to get a fair start without being bombarded by foreign competition. The free market isn't entirely free, what with government regulations and such, so while purists may trumpet their fears about trade protections, in the real world it is sometimes needed to level the playing field.
I believe that trade protections are effective when used in the short term to help a country or region develop its own strength. They become ineffective and even damaging when they are used to keep a lazy advantage rather than developing one’s own.
In the US we consider some countries to have unfair competitive advantages because they pay such low wages (which keeps the cost of their products down thus making them more desirable). You hear people call for trade protections to help Americans compete with those foreign businesses.
There is certainly a case to be made for protectionism. It seems that in the past countries have used protectionism to prosper (so long as other markets were open to them). Countries like Japan, South Korea and, later, China, have had success exporting even as their own markets have been relatively closed.
We’ve answered 318,919 questions. We can answer yours, too.Ask a question