ECO 15 - 1 Suppose Brazil developed a secret process that...

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1. Suppose Brazil developed a secret process that effectively quadrupled its output of coffee from its coffee plantations. This secret process enabled it to significantly undercut the prices of U.S. domestic producers. Would domestic producers receive a sympathetic ear to calls for protection from Brazil's lower cost coffee? How is this case different from that of protection against cheap foreign labor? #1. That means Brazil can sell their coffee cheaper than before. This would harm the coffee producers in the US because nobody will want to buy their coffee at a higher price. Domestic coffee producers would get sympathy from the US government because if they cannot sell their coffee then they will go out of business. Politicians want to protect the people from unfair competition. If they don't, then they will not get re- elected. This case is different from cheap foreign labor because what matters for trade is comparative advantage, not comparative labor costs. We aren’t sure of brazils secret
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