Why is protectionism popular

protectionism

trade policy behavior of the state to protect the domestic economy against foreign competition. Such a conclusion takes place in particular through customs duties and quantitative quotas for imports as well as subsidies for the domestic economy. Contrast free trade. comparative costs, trade barriers

Protectionism is understood as the deliberate intervention of a state to control foreign trade relations. Various measures of real economic and monetary foreign trade policy can be used for this purpose. The motive for protectionist measures is to protect domestic production from foreign competition. However, this prevents the efficient use of production factors: companies that are no longer competitive or no longer competitive are artificially protected, and competitive structures are not set up. The advantages of the international division of labor remain unused.

Collective term for all measures aimed at protecting an economy or individual sectors or producers from foreign competitors. The measures of traditional protectionism include, in particular, tariffs and export subsidies as tariff protectionism and quotas as non-tariff protectionism. Neoprotectionism, on the other hand, describes protective measures as a collective term that are neither linked to prices nor to quantity restrictions, but instead use methods that are not prohibited by the statutes of the General Agreement on Tariffs and Trade (GATT) or the World Trade Organization (WHO) (e.g. national Quality standards such as the “Beer Purity Law”, “Buy British”, etc.). Neoprotectionist measures can come about on the initiative of discriminated exporting countries themselves (e.g. voluntary export restrictions) and / or come into force through bilateral or multilateral agreements as Orderly Market Arrangements (OMA). Protectionist measures are supposed to have protective effects in order to alleviate the hardships of structural change or to promote the development of young industries (educational protectionism, infant industry protection).

In socialist economics: form of state foreign trade policy with which the domestic economy or individual sectors of its sector are protected from foreign competition.

In contrast to free trade, permanent or temporary trade barriers such as protective tariffs are intended. Quantity or other restrictions that are usually imposed by economically weaker countries, economic and

avoid social upheaval. > Free trade,> trade barriers

Protectionism refers to targeted political measures within the framework of foreign trade policy that protect domestic producers from foreign competition. In a narrower sense, this includes all measures to prevent imports, in a broader sense also measures to promote exports, as they create additional advantages for the local economy in international competition. In a narrower sense, protectionism is to be seen in connection with trade barriers (cf. Koch, 1998a, p. 123).

Protectionist measures can also include import bans for military or cultural reasons, import taxes to finance the state budget, import bans for health or moral reasons or embargoes for political reasons and subsidies (cf. Sauernheimer, 1989, column 1761).

In analogy to trade barriers, protectionism can be divided into tariff and non-tariff areas. Tariff protectionism includes (protective) tariffs, while non-tariff protectionism includes all other trade-inhibiting and distorting instruments, e.g. price-related measures (taxes, subsidies, etc.), volume regulations (quotas) and administrative measures (standards, customs clearance practices) (see Schroth, 2001, p. 456).

The following basic forms of protection can be distinguished:

- the defense against undesired import competition and a strengthening of the demand for domestic products through import restrictions (self-restraint agreement)

- an improvement in the sales opportunities of the local economy on the world market through export promotion.

The bad experiences with protectionism, which reduced the world trade volume from three to one billion US dollars between 1929 and 1933, led to a revival of the free trade idea, which culminated in a phase of trade liberalization with the end of the Second World War. Successes were achieved, among other things, through the internationally supported policy of the GATT (General Agreement on Tariffs and Trade) and the International Monetary Fund (IMF). The GATT in particular led to a liberalization of trade flows and an increasing reduction in protectionist measures. This particularly affected tariff barriers to trade, which were outlawed under the GATT statutes. However, with the first oil price crisis in 1973, the economic framework conditions for the oil-importing countries deteriorated drastically in the mid-1970s. This development was characterized by a wave of protection that was neither linked to prices nor to quantities, but rather contained non-tariff measures. Since protectionism has shifted to non-tariff measures and more subtle instruments, e.g. self-restraint agreements, it is also referred to as neo-protectionism. Between 1981 and 1987 the proportion of imports from industrialized countries affected by non-tariff trade barriers rose by 20.7% (cf. Deutsche Bank, 1998, p. 347; Koch, 1998a, p. 168; Beise / Oppermann / Sander, 1998, p. 61ff.).

Even individual trade agreements have protectionist features, such as the World Textile Agreement (WTA). At the beginning of the 1990s, the World Bank determined that less than 10% of world trade complied with GATT regulations. During this period there were around 200 areas of conflict between the EC and the USA in particularly vulnerable sectors such as steel, textiles, clothing, aircraft, shipbuilding, automobiles, consumer electronics, coal, soy beans and other agricultural products.

The consequences of protection are manifold (see Altmann, 1993, p. 262E):

- Protectionist measures are similar to those of regional integration zones (forms of cooperation and integration). A customs union or an internal market (European internal market) is always associated with internal liberalization, but protectionist isolation from the outside. Negative effects relate, for example, to the price level, which in certain circumstances can be higher than in free trade.

Protectionist measures against exporting countries reduce sales and thus employment, growth and profit opportunities on the part of exporters (import protection) and impair the sales opportunities of other countries on the world market (export protectionism).

Adaptation, circumvention, retaliation or negotiation are generally possible countermeasures for protection. Avoidance strategies took place, for example, in the form of direct investments in so-called "screwdriver factories", in which certain finished products, especially by Japanese producers in the EU, were only put together (assembled). They provoked countermeasures with specifications for the share of domestic added value (local content policy). Retaliation is expressed in trade wars, while negotiations often lead to "voluntary" self-restraint agreements. Overall, the increase in protectionist measures and in particular non-tariff trade barriers threatens liberalization efforts.

The 1990s were marked by a new wave of trade liberalization, which was marked by a rapid increase in global investment and financial relationships. With the constructive conclusion of the 8th GATT World Trade Round in December 1993, the realization that high protectionist hurdles not only pose problems for trading partners but also backlashes and reduced competitive intensity also harmed their own economy began to gain acceptance worldwide (cf.Koch , 1998a, p. 168).

Part of foreign trade policy, which includes all state control interventions in foreign trade, which are intended to serve the goal of protecting domestic suppliers or buyers from foreign competition. Protectionism thus includes interventions in a world trade order based on the model of free trade, which induces a backward trend towards self-sufficiency. In most cases, protection is aimed at maintaining non-competitive or no longer competitive branches of the economy (for structural or employment-political reasons, e.g. in agriculture, the steel industry, etc.), on building up industries that are not yet competitive (e.g. in the Developing countries, educational tariffs) or the isolation of politically justified self-sufficiency areas (e.g. arms industry). However, the interventions can also be aimed in favor of the consumer by protecting the domestic use of export and import products from competing foreign demand. Protectionism can take the form of tariff or non-tariff barriers to trade. Tariff trade restrictions are to be understood as all forms of customs policy, non-tariff trade restrictions are all other obstacles to free international trade (see Fig.). The monetary policy instruments of exchange rate protectionism or even foreign exchange management can also be counted here. The use of protectionist measures to maintain or adapt the structure (permanent or temporary protective tariff) or to promote development (educational tariff) creates a certain degree Monopoly position for domestic suppliers and, due to the associated increase in the price of products, negative consequences for domestic consumers (customs effects). The redirection of trade flows compared to the situation of free trade means that production factors are tied up in relatively unproductive uses and thus negative welfare effects (foreign trade profit). There is a tendency for the volume of foreign trade to be restricted, which can be intensified by possible retaliatory measures by the affected foreign trade partners. The disruption of the international division of labor connected with protectionism led to the worldwide attempt to reduce protectionism through the regulations of the General Agreement on Tariffs and Trade (GATT) (world economic order). More recently, there has been an increased expansion of non-tariff protectionism and sustained protectionism in the industrialized countries vis-à-vis developing countries. In the current Uruguay Round of the GATT one is dealing with a-. on the one hand with the attempt to reduce the large number of non-tariff trade barriers (including in the service sector) and on the other hand to prevent new protectionist efforts between the large economic blocs of the EC, Japan and. USA emerge. However, it appears that more recently protectionist measures have been used again as part of a - strategic trade policy. In particular, self-restraint agreements are playing an increasingly important role. The effective degree of protection (protective tariff) is very different in the Federal Republic for individual production categories. There is little effective tariff protection, but high non-tariff protection in mining, shipbuilding and aircraft construction. There is little protection in mechanical engineering and the electrotechnical industry, i.e. in export-intensive branches. In contrast, there is high effective protection in the textile industry, the wood and pulp industry, the metal industry and the agricultural sector, i.e. in labor and raw material-intensive sectors in which there are international cost and thus competitive disadvantages. The latter suggests that the protectionist measures are often at the expense of employment and wage security arguments. industrialized developing countries. Literature: Berg, H., Foreign Economic Policy, in: Vahlens Compendium of Economic Theory and Economic Policy, Vol. 2, 5th edition, Munich 1992, pp. 459 ff. Corden, WM, The Theory of Protection, Oxford 1971. Glismann, HH ua, Weltwirtschaftslehre, Vol. I: Foreign trade and currency policy, 3rd edition, Göttingen 1986, p. 42 ff. Helpman, EIKrugman, P., Trade Policy and Market Structure, London 1989. Smeets, HD, Importschutz und GATT, Bern 1987.

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