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>> International Trade Section 4: The Political Economy of Trade Protection chapter 18 We have seen that international trade produces mutual benefits to the countries that engage in it. We have also seen that tariffs and import quotas, although they produce winners as well as losers, reduce total surplus. Yet many countries continue to impose tariffs and import quotas, and to enact other protectionist measures. To understand why trade protection takes place, we will first look at some common justifications for protection. Then we will look at the politics of trade protection. Finally, we will look at an important feature of trade protection in today’s world: tar- iffs and import quotas are the subject of international negotiation and are policed by international organizations. Arguments for Trade Protection Advocates of tariffs and import quotas offer a variety of arguments. Three common arguments are national security , job creation , and the infant industry argument .
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2 CHAPTER 15 SECTION 4: THE POLITICAL ECONOMY OF TRADE PROTECTION The national security argument is based on the proposition that overseas sources of goods are vulnerable to disruption in times of international conflict; therefore a coun- try should protect domestic suppliers of crucial goods with the aim to be self-sufficient in those goods. In the 1960s, the United States—which had begun to import oil as domestic oil reserves ran low—had an import quota on oil, justified on national security grounds. Some people have argued that we should again have policies to dis- courage imports of oil, especially from the Middle East. The job creation argument points to the additional jobs created in import-competing industries as a result of trade protection. Economists argue that these jobs are offset by the jobs lost elsewhere, such as industries that use imported inputs and now face high- er input costs. But noneconomists don’t always find this argument persuasive.
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This note was uploaded on 04/10/2008 for the course ECONOMICS 103 taught by Professor Sheflin during the Spring '08 term at Rutgers.

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