Trade Protectionism Revisited - Background, Outcomes, and Analysis
Competition Forum › Vol. 6 Nbr. 2, July 2008
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Summary
World trade has been growing faster than world GDP and benefiting countries with free trade policies. Yet, governments continue to impose traditional and innovative trade protections, and justify their policies by claiming that trade restrictions protect national interests. Research studies actually show that protectionism is harmful and produces negative outcomes. The real reason behind protectionist policies is domestic politics and government yielding to pressure from interest groups who stand to benefit from protectionism affecting their industries.
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Trade Protectionism Revisited - Background, Outcomes, and Analysis
INTRODUCTION
The 2008 Index of Economic Freedom published by the Heritage Foundation ranks the United States of America as the fifth freest economy in the world. A dimension in the Index is the extent to which international trade is free of government interference. In this regard, while not top ranking, the US is a world leader and champion of free trade, and this has been so for decades, especially after World War II when the US government made free trade part of its foreign policy to promote political cooperation and stability. US government commitment to free trade, however, has not been without occasional but repeated patterns of protectionism that interfere with free trade and cause negative consequences domestically and internationally. More recently, protectionist sentiments in the US seem to be surging again as manifested by the many bills before the Congress that aim to curtail free trade in different industries and with different countries. Congress has also been stalling on debate and ratification of free trade agreements that the Administration had laboriously negotiated with key trade partners in Latin America and Asia. Even presidential candidates in 2008 have been promising to open existing trade agreements to re-negotiate measures that are more restrictive. Furthermore, Congress is putting the final touches on a $300 billion Farm Bill that is proving to be the "co...See the full content of this document
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