Incidentally, 99 percent of shoes worn in the United States are imported. Page 137 Making Responsible Decisions Global Ethics and Global Economics—The Case of Protectionism ethics World trade benefits from free and fair trade among nations. Nevertheless, governments of many countries continue to use tariffs and quotas to protect their various domestic industries. Why? Protectionism earns profits for domestic producers and tariff revenue for the government. There is a cost, however. Protectionist policies cost Japanese consumers between $75 billion and $110 billion annually. U.S. consumers pay about $70 billion each year in higher prices because of tariffs and other protective restrictions. Sugar and textile import quotas in the United States, automobile and banana import tariffs in European countries, shoe and automobile tire import tariffs in the United States, beer import tariffs in Canada, and rice import tariffs in Japan protect domestic industries but also interfere with world trade for these products. Regional trade agreements, such as those found in the provisions of the European Union and
the North American Free Trade Agreement, may also pose a situation whereby member nations can obtain preferential treatment in quotas and tariffs but nonmember nations cannot. Protectionism, in its many forms, raises an interesting global ethical question. Is protectionism, no matter how applied, an ethical practice? A quota is a restriction placed on the amount of a product allowed to enter or leave a country. Quotas can be mandated or voluntary and may be legislated or negotiated by governments. Import quotas seek to guarantee domestic industries access to a certain percentage of their domestic market. For example, there is a limit on Chinese dairy products sold in India, and in Italy there is a quota on Japanese motorcycles. China has import quotas on corn, cotton, rice, and wheat. The United States also imposes quotas. For instance, U.S. sugar import quotas have existed for more than 70 years and preserve about half of the U.S. sugar market for domestic producers. American consumers pay $3 billion annually in extra food costs because of this quota. U.S. quotas on textiles are estimated to add 50 percent to the wholesale price of clothing for American consumers—which, in turn, raises retail prices. The major industrialized nations of the world formed the World Trade Organization (WTO) in 1995 to address an array of world trade issues. 3 There are 159 WTO member countries, including the United States, which account for more than 90 percent of world trade. The WTO is a permanent institution that
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