unit 3 foreign trade policies

• The domestic employment argument
The Infant Industry Argument
• One of the oldest and most well-known arguments for import protection is to assist the growth of a new industry in a country at early stages of its economic development.
Free trade vs. trade protection
• • • • Para 6 Protection reduces competition Limit competition from foreign producers Thus it permits protected industries to become less efficient and gain monopoly. • Unrestricted trade (free trade) is more effective means of promoting competition and efficiency than antimonopoly laws.
Free trade vs. trade protection
• Para 3 • Import creates job • It is not usually obvious that import provides a significant source of new jobs. These occur in those industries producing the exports that other countries buy with the money earned from our imports. • Other countries earn money from our imports, then they have the money to buy our exports. In this sense import creates jobs.
如果世界上的政治领袖们明知自由贸易会带 来更大的效益，为什么他们还要强制实施保 护性贸易限制呢？在许多发达国家最常见的 理由就是：进口会影响国内的某些行业, 在 该行业引发失业。这一点显而易见。
Free trade vs. trade protection
• Para 4 • Protection reduces exports • It follows that the volume of our exports suffers from import restrictions. • Imports make it harder for other countries to sell to us, reduce their income and their inability to buy our exports. • Reduce unemployment in protected industries and increase it in exporting industries.
Free trade vs. trade protection
• Para 7 • Arguments for protection: Infant industry argument National security argument Wage protection argument Employment protection argument
Free trade vs. trade protection
• Para 7 • Arguments for protection • Many people tried to refute the law of comparative advantage and economic benefits of free trade, but they failed. • Many people contend that their industries are different situations requiring special consideration.
Free trade vs. trade protection
• • • • Para 2: introducing the author’s opinion But Invisible effects: Import in creating jobs, expanding export, increasing consumer choices, and enhancing competition • The following paragraphs are the author’s arguments.
• Later, David Ricardo demonstrated the benefits of trading via specialization— with the law of comparative advantages. “两优相
较择其重、两劣相较 取其轻” 。
Free rade
The Domestic Employment Argument
• The argument is that if the restrictions succeed in boosting domestic employment in the protected sector will be higher as a result.
Protectionist trade
Restraining trade between states, through methods such as tariffs (关税) on imported goods, restrictive quotas (配额), and a variety of other restrictive government regulations designed to discourage imports, and prevent foreign takeover of local markets and companies.
• 现实矛盾 – 忽视了一个现实问题：怎样才能做到限 制进口同时不伤害出口呢？ – 实行贸易保护的结果往往是增加了一个 部门的就业，减少了另一个部门的就业， 还外加消费者的损害。
Free trade vs. trade protection
• Para 1: introducing the topic and problems • Free trade leads to greater efficiency, why impose trade protection? • Import causes unemployment in industries affected. • For example: automobile and steel industries in America
Free trade vs. trade protection
• Para 5 • Protection reduces consumer choices • Narrow the range of choices available to consumers • Consumers don’t have the privilege of purchasing the best product for their money • Instead, consumers pay higher prices for similar products or less desirable products.
Para 7: Arguments for protection
Para 8: Flaws in all these arguments We can sell abroad only if we buy abroad.
If the world political leaders know that free trade leads to greater efficiency, why do they impose protective trade restrictions? The most common reason among many of the advanced countries is obvious: in the industries affected, import causes unemployment.
Free trade vs. trade protection
Para 1: Problems of free trade: unemployment
Para 2: But the author is for free trade: import creates jobs, expands export, increases consumer choices, and enhances competition Para 3 to Para 6: Import creates jobs, protection reduces exports, protection reduces consumer choice and protection reduces competition
Unit 3 Foreign Trade Policies
• The value of free trade（自由贸易）and the law of absolute advantages were first documented by Adam Smith in his book, The Wealth of Nations, in 1776.