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"Protectionism is a Government policy of placing barriers on free trade." Describe, using examples, barriers to free trade between countries. - Leaving Cert Business - Question B - 2012
Question B
"Protectionism is a Government policy of placing barriers on free trade." Describe, using examples, barriers to free trade between countries.
Worked Solution & Example Answer:"Protectionism is a Government policy of placing barriers on free trade." Describe, using examples, barriers to free trade between countries. - Leaving Cert Business - Question B - 2012
Step 1
Quota
Answer
A quota is a physical restriction or limit on the number of units of a good that may be imported or exported. Quotas discourage imports and can encourage the sale of domestically produced goods. An example is when the European Union has placed a quota on the number of clothes imported from China, limiting the overall quantity available in the EU market.
Step 2
Tariff
Answer
A tariff is a tax on the value or price of goods imported into a country. This tax makes imported goods more expensive, rendering them less competitive compared to local products. For instance, New Zealand imposes a tariff on various goods, which affects the cost and competitiveness of imports in their market.
Step 3
Embargo
Answer
An embargo refers to a complete ban on the import of goods from one particular country, often for political reasons. An example is when EU countries imposed a blanket embargo on the import of beef from the UK due to concerns regarding the health and safety standards associated with the British beef industry.
Step 4
Subsidies
Answer
Subsidies are financial grants and payments made by governments to domestic firms, allowing them to reduce their operating costs and thus become more competitive against imports. For example, the EU has subsidized its agricultural and aircraft manufacturing sectors, providing them with a price advantage over foreign imports.
Step 5
Administrative Regulations
Answer
Administrative regulations include customs delays, excessive paperwork, and other bureaucratic procedures that can act as barriers to trade. These regulations can complicate and delay the import process, leading to additional costs for businesses. Examples include stringent customs checks that European countries might impose to exclude unwanted imports.