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(a) Why do most countries have some protectionist trade barriers?

(b) Identify two types of protectionist trade barriers.

(c) Which is usually better for most countries, protectionist trade policies or free trade? Explain.

(d) For most countries would a fair trade policy usually be the same as a free trade policy? Explain.

(e) Which is better for a country economically, a multilateral free trade agreement including most countries, such as the WTO, or a regional trade agreement with one's neighboring countries, such as NAFTA? Explain.

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Joshua Stredder
Joshua StredderLv10
28 Sep 2019

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Related questions

Answer the following questions as briefly and precisely as possilble.

a) why do most countries use trade protection tools?

b) Is there any theoretical justification to use trade protection tools?

c) Explain why rich countries subsidize agricultural sector in their economies.

d)Explain why rich countries subsidize high-tech firms in their economies.

e) which countries (and groups within a country) most likely oppse international labor standards? Explain why.

f) explain why some countries use coluntary export restrains (VER) instead of imports quota?

g) list and explain at least there reason as to why contries decide to form regional trade agreements.

h) why we need to make distinction between large and small countries in making trade policy analysis?

We talked in class about free trade areas, customs unions and common markets. We also discussed basic principles of the WTO, including trade should not be discriminatory and should head in the direction of fewer rather than more barriers. And finally we discussed the welfare impacts of tariffs and other trade barriers on a country, including consumers, producers and government. Suppose three countries US ($8), Mexico ($6) and China ($4) make a good at the prices in parenthesis. Now consider the following alternative scenarios:

· Scenario 1: The current tariff rate is $5

a. If there are no free trade arrangements, from which country’s producers will US consumers buy the product? (1 point)

b. If we now signed NAFTA, from which country’s producers will US consumers buy the product? (1 point)

c. Are US consumers and the country as a whole better off or worse off with NAFTA and why? (1 point)

· Scenario 2: The current tariff rate is $3

d. If there are no free trade agreements, from which country’s producers will US consumers buy the product? (1 point)

e. If we now signed NAFTA, from which country’s producers will US consumers buy the product? (1 point)

f. Are US consumers and the country as a whole better off or worse off with NAFTA and why? (1 points)

g. What is the difference in the two scenarios? What does that tell you about the impact of free trade agreements? (2 points)

1. Who are the winners and who are the losers from "free trade"?

2. Why do economists believe that a tariff is better than an import quota? (Actually, most economists do not like either!)

3. Why is the "infant industry" protectionist argument perhaps valid for some situations?

4. What is one argument for and one argument against NAFTA?

5. Evaluate this statement: "If a country bans an import, smuggling is inevitable. We should welcome smuggling because it increases consumer welfare."

6. Suppose Country A can produce 200 toys or 400 pineapples per day, while Country B can produce 300 toys or 900 pineapples per day. Where do the comparative advantages lie? Should trade take place?

7. What is dumping? Why is this done?

8. Discuss this statement: "Free traders win the economic arguments, but protectionists (those who favor tariffs) often win the elections."

9. Do you believe that American consumers should boycott goods made by exploited workers in Less Developed Countries? Explain why this might or might not work.

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