What role does protectionism play in U.S. trade policy?
Trade policies vary from economy to economy. It is vital that each economy adopt a trade policy that will enhance business and protect the interest of its business community. Initially, the art of trade was meant to be a zero sum game. This is a situation where one party gives up something they either have much of or something they are willing to give up for something the other party has too much of or is willing to give up. This was referred to a zero sum game as both parties were declared as winners. However over the years, there is a need to cover one’s self in protectionism as a trade policy. The US for instance use this policy as a bargaining chip to penetrate foreign markets. This is because; the threat of protectionism in the first instance causes the country to engage in free trade agreements Chorev, (2007).
What are the economic consequences of protectionist policies?
Protectionism has the following economic justifications: Infant industry protection – this tenet asserts that, through adoption of protectionism as a trade policy foreign industry will accord young local industries time to develop. However, the danger that is attached is the fact that, young infant industries will never attain optimality due to lack of competition (Peng, 2009).
Protection against import dumping – for most of the developing countries around the globe, it is important that they impose protectionism trade policy to control the type of imports they get and to avoid the chances of dumping. This is achieved by developing anti dumping tariff (Peng, 2009).
Who benefits from trade protection? Who is hurt by trade protection?
Protection policies are mainly engaged to protect certain participants from exploitation. They mainly benefit importers as they are covered from being over exploited by the exporters. This is because, the various import controls usually enhance fair trade. Also on the issue of infant industries, protectionism enhances growth of local industries hence fostering economic developments. Protectionism is viewed as hurting the exporter as it curtails their growth into new markets (Peng, 2009).
To support your argument, use at least one specific example of a current protectionist policy
The EU (European Union) has imposed anti dumping measures. This was a reaction from the salmon farmers’ complaints to the EU that they are being edged out of business by the Norway imports. This move was thus adopted to foster growth of the farmers and protect their interest while hurting the Norway exporters (Giannakopoulos, 2006).