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FREE TRADE AND PROTECTIONISM - Coggle Diagram
FREE TRADE AND PROTECTIONISM
Free trade
Take place between countries when there are no barriers to trade
Goods and services are allowed to move freely between countries
Arguments in favour of protectionism
Protecting domestic employment
Protecting the economy form low-cost labour
Protecting an infant (sunrise) industry
To avoid the risks of over-specialization
Strategic reasons
To prevent dumping
To protect product standards
To raise government revenue
To correct a balance of payments deficit
Arguments against trade protection
Protectionism may raise prices to consumers and producers of the imports that they buy
Protectionism would lead to less choice for consumers
Competition would diminish if foreign firms are kept out of country
Protectionism distorts comparative advantage
Protectionism distorts comparative advantage
Protectionism may lead to retaliation by other countries
Protectionism may hinder economic growth
Main types of protectionism
Tariff
Quota
International trade subsidy
National campaigns
Administrative barriers
Embargoes
Health and safety standard and environmental standards
Red tape