Consider the argument for restricitng trade. PLEASE ANSWER QUESTION COMPLETELY!
ID: 1193666 • Letter: C
Question
Consider the argument for restricitng trade. PLEASE ANSWER QUESTION COMPLETELY!
a.) Imagine that you are a lobbyist for timber, an establishedindustry suffering from low-priced foreign competition, and you aretrying to get Congress to pass trade restrictions. Which two orthree of the five arguments do you think would be most persuasiveto the average member of congress? Explain you reasoning and givereferences.
b.) Assume you are an asstute studnet of economics, Although allthe arguments for restrictings trade have all their shortvcomings,name the two or three arguments that seem to make the most economicsense to you. For esch, describe the economic ratinale for andagainst these arguments for trade restricitons. Please show references.
Explanation / Answer
a.
Five arguments for restricting trade:
1. Quality competition: Domestic industries could be out of place by the export-quality products. Therefore, the domestic industries should be protected by trade restrictions.
2. Price competition: foreign products could be offered at lower price to win the competition with domestic products. Domestic companies might not able to sell products at such lower price because of their financial limitation. Therefore, they need trade restriction protection.
3. Patriotism problem: Foreign companies do not have patriotism. They can abuse domestic countries natural resources. This may cause problem in future. Therefore, the restriction is necessary.
4. Balance of payment: This is the slip of foreign currency, since the earnings of foreign sellers goes out of domestic nation.
5. Wrong thinking: People think that all foreign goods are excellent and these are always better than domestic goods. This is a wrong perception and should not be encouraged by promoting trade.
Out of the above five the 1st, 2nd, and 3rd points are persuasive, since these are relating to competition issue. Here the competition is between the domestic industry and foreign industry.