argument to protect a good due to cultural heritage never really gains traction

Argument to protect a good due to cultural heritage

This preview shows page 23 - 25 out of 43 pages.

argument to protect a good due to cultural heritage never really gains traction and success at the federal level where trade policy is set for the United States. Infant Industry The infant industry argument is one that is used by new, or “infant,” companies. They argue that new companies in the country cannot compete with established companies from other countries. For example, a new car company in Inland would argue that it could never compete against the name recognition of Ford or Toyota, and so the country would require protection. This protection could be achieved in the form of a tariff against Fords and Toyotas being imported into Inland, or by Inland’s government giving Inland’s car company a subsidy that would lower their costs and
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allow them to sell the cars cheaper both at home and in other countries. However, in order to be successful, these types of policies require Inland’s government to know which new company would be able to compete. Essentially, the government would be picking winners and losers, and this very easily leads to corruption. Also, when the company “grows up,” it may no longer need the extra help from the government. However, a company that gets protection, or a subsidy, has a strong incentive to never “grow up.” Protection is not needed for companies to start, grow, and flourish, even against established companies. Unfair Competition The unfair competition argument is based on the idea that all countries should play by the same rules, but, realistically, not all countries do. The WTO is based on this idea, as well. If both countries are members of the WTO, and one feels the other is being unfair, they can make a complaint with the WTO. Mexico complained that the United States was unfairly banning its tuna when the United States put a requirement on imported tuna that it had to be caught with dolphin-safe nets. The WTO found that the United States had put an illegal trade barrier up and the United States was forced to repeal the regulation. When a country is accused of dumping, this is another example of the unfair competition argument. Not all economists believe that dumping is unfair to the country where the goods are being sent. If Inland wants to subsidize steel so Outland will buy more, Outland gets a better deal with a cheaper price, and it is Inland’s citizens who should be complaining. Protection as a Bargaining Chip The last argument is protection as a bargaining chip, which means that a country will threaten trade barriers to get another country to do what it wants. Often, the country that makes the threat is not willing to deliver on the threat. Countries that follow free trade are collectively wealthier, but individuals do get hurt. Countries that have free trade often have policies that help those who have been hurt gain new jobs. In the end, it is still up to the individual to take advantage of these policies and gain the needed skills, or move to areas where jobs are located. If people don’t, and, instead, apply political pressure to
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