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"The goal of the World Trade Organisation (WTO) is to reduce protectionism and allow free trade." Illustrate your understanding of the underlined term. - Leaving Cert Business - Question 3 - 2014
Question 3
"The goal of the World Trade Organisation (WTO) is to reduce protectionism and allow free trade." Illustrate your understanding of the underlined term.
Worked Solution & Example Answer:"The goal of the World Trade Organisation (WTO) is to reduce protectionism and allow free trade." Illustrate your understanding of the underlined term. - Leaving Cert Business - Question 3 - 2014
Step 1
Protectionism
Answer
Protectionism refers to trade barriers imposed by governments. These barriers are established through government actions and policies that restrict or restrain international trade.
The primary aim of protectionism is often to protect domestic industries by reducing competition from foreign businesses. This can be accomplished for various reasons, including economic interests, political motives, or health concerns.
Common examples of protectionist measures include:
- Tariffs: Taxes imposed on imported goods, making them more expensive and less competitive compared to local products.
- Quotas: Limits on the quantity of certain goods that can be imported, further restricting foreign competition.
- Administrative Barriers: Regulations that create hurdles for importation, such as complicated customs procedures.
- Embargoes: Restrictive measures that prohibit trade with specific countries.
Through these practices, governments aim to safeguard jobs and promote local industries, albeit sometimes at the cost of higher prices and limited choices for consumers.