Protectionism Protectionism Protectionism is the practice of putting limits on foreign trade to protect businesses at home.
Protectionism Protectionism Some of the reasons in favor of protectionism are:• Foreign competition can lower the demand for products made
at home.• Companies at home need to be protected from unfair foreign
competition.• Industries that make products related to national defense
need to be protected.• The use of cheap labor in other countries can lower wages or
threaten jobs at home.• A country can become too dependent on another country for
important products like oil, steel, or grain.• Other countries might not have the same environmental or
human rights standards.
Trade Barriers Trade Barriers
To limit competition from other countries, governments put up trade barriers to keep foreign products out.
A tariff is a tax placed on imports to increase their price in the domestic market.
An embargo is when the government decides to stop an import or export of a product.
A quota is a limit placed on the quantities of a product that can be imported.
Free Trade Free Trade
Supporters of free trade believe there should be no limits on trade.
Free Trade Free Trade The benefits of free trade are:
• It opens up new markets in other countries. • It creates new jobs, especially in areas
related to global trade.• Competition forces businesses to be more
efficient and productive.• Consumers have more choice in the variety,
price, and quality of products.• It promotes cultural understanding and
cooperation between countries.• It helps all countries raise their standard of
living.
Trade Alliances Trade Alliances To reduce limits on trade more countries are forming trade alliances with each other.
In a trade alliance, several countries merge their economies into one huge market.
Trade Alliances Trade Alliances Some of the major trade alliances in the world today are:
• NAFTA • European Union (EU) • Association of Southeast Asian Nations (ASEAN)
Trade Alliances Trade Alliances NAFTA (North American Free Trade Agreement) was controversial because some workers would be displaced when trade barriers were lowered.
Examine the cartoon below.Is it for or against free trade?What are the costs of free tradeWhat are the benefits of free trade?
