4.1.4

• What is the definition of protectionism?

  Protectionism refers to government actions or policies that restrict international trade to protect domestic industries from foreign competition.
• Why do governments implement protectionism?

  Governments implement protectionism to protect jobs, infant industries, prevent dumping, raise revenue, prevent harmful goods, and improve the balance of payments.
• What is one reason for protectionism related to employment?

  Protectionism safeguards domestic employment from overseas competition.
• How does protectionism help infant industries?

  Protectionism helps new industries grow by shielding them from stronger international competitors.
• What is the purpose of preventing dumping through protectionism?

  Preventing dumping stops foreign producers from selling goods below cost in the domestic market, which can harm local businesses.
• How do tariffs contribute to government revenue?

  Tariffs on imports generate funds for the government.
• What is the role of protectionism in preventing harmful goods?

  Protectionism blocks the import of products deemed harmful or undesirable.
• How does protectionism improve the balance of payments?

  Protectionism limits imports and boosts exports to reduce a country's trade deficit.
• What is a tariff?

  A tariff is a tax on imports that makes foreign goods more expensive to reduce demand and encourage local production.
• What was an example of a tariff imposed by Ecuador?

  Ecuador imposed 21% tariffs on imports from Colombia in 2015.
• What are import quotas?

  Import quotas limit the number of goods that can be imported, protecting domestic industries.
• What is an embargo?

  An embargo is an extreme form of quota that completely bans imports, often for political reasons.
• What was an example of an embargo related to Libya?

  There was a military goods embargo on Libya in 2015.
• What are administrative barriers in trade?

  Administrative barriers are regulations and standards that make it difficult for foreign goods to enter the domestic market.
• What was an example of an administrative barrier imposed by the EU?

  The EU imposed a ban on foods from Japan in 2011 due to contamination fears.
• What are subsidies in the context of trade?

  Subsidies are financial support to domestic producers to help them compete with imports or to encourage exports.
• What was an example of subsidies provided by the Indian government?

  The Indian government provided subsidies for textiles and engineering goods in 2012 to boost exports.
• What is a potential problem with trade barriers related to retaliation?

  Countries may retaliate by imposing their own tariffs, leading to trade wars.
• How does inelastic demand affect the effectiveness of tariffs?

  If demand for imports is inelastic, a price increase due to tariffs will not significantly reduce the quantity demanded, limiting the effectiveness of tariffs.
• What is one way countries avoid tariffs and quotas?

  Some countries implement strict import regulations and product specifications instead of tariffs and quotas, making it harder for foreign products to meet standards.
• What are the key terms related to protectionism and trade barriers?

  • Protectionism: Government actions to protect domestic industries from foreign competition.
  • Embargo: A total ban on trade, often for political reasons.
  • Subsidy: Financial aid given to domestic producers to help them compete with overseas firms.
  • Trade Barriers: Measures that restrict international trade (e.g., tariffs, quotas).
  • Dumping: Selling large quantities of goods below cost in another country to undermine local producers.