Protectionism versus Free-Trad essays

Protectionism versus Free-Trad essays The main objective of the following paper is to explain the protectionism versus free trade argument, to explain the problems this debate has created in the arena of international trade and to outline the ways in which international agreements have contributed to their resolve. Although many of the following issues are still present in the world economy today, they are constantly improving due to agreements such as the Uruguay Round and the North American Free Trade Agreement (NAFTA). Protectionism is easily related to the belief that a nations resources need to be protected from international competition brought about by trade. Protectionist policies include trade restrictions which are of many natures. (See Appendix 1.A) Nations seek protectionist policy for various reasons such as: a source of government revenue,, to satisfy domestic interest groups and for the infant-industry argument among others. (See Appendix 1.B) The on-going debate regarding protectionist measures in the world economy seems to be an everlasting struggle. The recent World Trade Organization (WTO) conference in Seattle, for example, turned into a political battleground where protectionists rioted against the free traders. (Martin Morse Wooster, 55, June 2000) Violent riots and passionate arguments come to characterize meetings regarding the following topics, however to understand the issues at hand, one must get beyond the sound and the fury and examine the basic topics at hand. Tariffs are additional costs, such as taxes, that are added to a commodity as it either enters or leaves a nation. Import tariffs will be the type of tariff discussed in this paper. Tariffs can be calculated in the following three manners: the ad valorem tariff which is calculated by a fixed percentage of the estimated market value of the good, the specific tariff which is calculated as a fixed dollar amount per unit and the compound tariff whic ...