Trade protectionism refers to government policies that restrict international trade to protect domestic industries. There are various types of protectionist policies including tariffs, quotas, subsidies, and standards. Governments intervene in trade to achieve economic and social objectives like protecting domestic industries and jobs. However, free trade provides overall benefits. Trade policies are debated by stakeholders like businesses, consumers, and suppliers who are affected. Governments use tools like tariffs and quotas to restrict imports and promote domestic production and employment.

1. TRADE PROTECTIONISM
By
Ahtisham
&
Amna

2. INTRODUCTION
Protectionism
Protectionism refers to government policies that
restrict international trade to help domestic industries.
Types of Protectionism
▪ Tariffs
▪ Quotas
▪ Subsidies
▪ Standardization

3. Trade Protectionism
Conflicting Results of Trade Policies
Despite free-trade benefits, governments
intervene in trade to attain economic, social, or political objectives.
▪ This keeps the economy healthy and promotes economic growth. If the domestic
economy is struggling to compete with international competitors, a government
may impose certain tariffs to direct consumer attention back to local businesses and
therefore insulate and protect their own economy from outside competition.

4. Trade Protectionism
The Role of Stakeholders
Proposals on trade regulations often spark
fierce debate among people and groups that believe they will be affected—the
so-called stakeholders.
Stakeholder:
 Stakeholder includes every person who is either direct or indirect affected by a
business
 A stakeholder is a party that has an interest in a company and can either affect or be
affected by the business. The primary stakeholders in a typical corporation are its
investors, employees, customers, and suppliers.
Role of Consumer
Consumers usually don’t care.

5. Trade Protectionism
Economic Rationales for Government Intervention
Why governments intervene in trade
Economic rationales
1- Fighting Unemployment
Import restrictions to create domestic employment
2- Protecting “Infant Industries”
The infant-industry theory states that new industries in developing countries
need protection against competitive pressures until they mature.
3- Developing An Industrial Base
Countries seek protection to promote industrialization
4- Economic Relationships With Other Countries
Every nation monitors its absolute economic welfare,
compares its performance to that of other countries, and enacts practices aimed at improving its relative
position.

6. Trade Protectionism
Continue……..
Non-Economic rationales
1- Maintaining Essential Industries
Governments apply trade restrictions to protect essential domestic industries during peacetime so
the country is not dependent on foreign supplies during war
2- Promoting Acceptable Practices Abroad
Trade controls are used to pressure foreign governments to alter their stances on a variety
of other issues ranging from human rights to environmental protection to production of goods the importing country finds dangerous or
immoral.
3- Maintaining or Extending Spheres of Influence
A country’s trade restrictions may coerce governments to follow certain
political actions or punish companies whose governments do not
4- Preserving National Culture
To sustain this collective identity, they prohibit exports of art and historical items that they deem to be part
of their national heritage.

7. Trade Protectionism
Instruments of Trade Control
1- Tariff
Tariff, also called customs duty, tax levied upon goods as they cross national boundaries, usually
by the government of the importing country.
2- Nontariff Barriers:
Non-tariff barriers to trade are trade barriers that restrict imports or exports of
goods or services through mechanisms other than the simple imposition of tariffs.
 Direct Price Influences
Subsidies, Aid and Loans, Customs Valuation , Other Direct-Price
Influences
 Quantity Controls
Quotas, “Buy Local” Legislation, Standards and Labels, Specific
Permission Requirements, Administrative Delays, Reciprocal Requirements,
Restrictions on Services

8. Trade Protectionism
Dealing with Governmental Trade Influences
When companies face possible losses
because of import competition, they have several options, four of which stand out:
1. Move operations to another country.
2. Concentrate on market niches that attract less international competition.
3. Adopt internal innovations, such as greater efficiency or superior products.
4. Try to get governmental protection.