Protectionism

As protectionism (from the Latin protectio: protection) is referred to in terms of economic issues all measures in the form of trade barriers by which a state tries to disadvantage foreign suppliers in the domestic market in order to protect the domestic market. Means this is the strategic trade policy.

Measures of protectionism

A state or a free trade area (such as the EU or NAFTA) can protect its own internal market by introducing one or more of the following protectionist measures.

• Customs duties: Customs duties constitute a form of taxes and are often charged on imported goods. This becomes more expensive the import of the goods concerned and thus makes this priced less attractive. This ensures that similar goods of domestic production which would normally be more expensive due to higher wage costs about, are traded on the very same price level and thereby decreases the amount of imported goods.

• Import quotas (including import quotas ): To limit the amount of certain imported goods, a State may set an import quota for this. If the quota is exhausted, no further amount of the relevant type of goods may be imported during the period defined for the quota. Especially often find import quotas in the agricultural sector.

• Subsidies (including subsidies): State subsidy of certain economic areas allow their survival, although the real production costs are significantly higher than the world market price. Without this aid, the domestic production would grind to a halt, as equivalent goods on the world market could be bought much cheaper. It will be doing a variety of subsidy funds applied, such as tax breaks, provision of subsidized loans, direct grants, and others. Are particularly common in Germany subsidies of agriculture and mining. In part, new industries are subsidized (about solar technology ), until they have become established.

• Export subsidies: Export subsidies are State aid to facilitate the export of domestic goods, which would not stand a chance without this support in the world market due to high production costs. In the EU, mainly agricultural products such as dairy, meat or sugar are supported with such subsidies.

• Compliance requirements: in some domestic markets, the marketing of certain goods is dependent on the fulfillment of certain standards (eg CE marking in the EU, HACCP standards of food safety, environmental standards, beer after the "Deutsches Reinheitsgebot ", etc.). Too can be a certain kind of protectionism be seen, because it restricts free trade.

Justifications for protectionism

The aim is usually to promote or support the national economy generally specific products or sectors of a country. In addition, an attempt is made to enable the construction of new, not yet competitive industries because these industries would not withstand the pressure of the world market in the early stages. Former developing countries such as the People's Republic of China were able to ascend to emerging economies or industrial nations. This was liberalized countries with similar conditions are not on this path. It was similar with Germany (1874-1914) and the USA ( 1865-1900 ). In the U.S., was the dispute over the future economic policy ( free trade or protectionism ) between the rural southern states and the industrializing northern states a reason for the secession of the Southern states.

In sectors that are considered important in terms of national security and military interests of a country are maintained bans on foreign trade or restrictions on the free movement of capital as inevitable even in states that see themselves as champions of free trade. So arguments against the Chinese radio network supplier Huawei, for example, in 2010, put forward the like.

Criticism

Opponents of protectionism, however, call for a global free trade, arguing protectionists would not observe comparative cost advantages and other advantages of trading. From the fact that a replacement is only performed when the object is preserved longer valued as the bartered - to be bad no one exchanges with the expectation after the exchange - they conclude immediately that any restriction is welfare reducing.

Friedrich August von Hayek said about the usefulness of protective tariffs:

" Difficulties arise only when an inch is used to let grow up an industry more rapidly than they would do without customs, or to protect against adverse influences that would bring about their downfall. In these cases, a to subsidize certain group, all other producers and consumers a sacrifice imposed. "

Von Hayek took off his considerations the following conclusion: " The abolition of sovereign nation-states and the creation of an effective international legal order are the necessary complement and logical consummation of the liberal program. "

The trade relations between the U.S. and China

The trade relations between the U.S. and China have come to a paradigmatic case in economic theory and a political dispute with regard to the free world trade since fairly long years to the present day. Nobel laureate economist Paul Krugman keeps protectionist measures by the U.S. against China's trade strategy, which he describes as " mercantilism ", for an appropriate as inevitable counter-strategy. He refers to Paul Samuelson, who considered the arguments for free trade to be ineffective once an economy is faced with underemployment in an economy that subsidized export.

An example of the protectionist measures taken by the U.S. against China, the solar market dar. In May 2012, the U.S. imposed punitive tariffs of 31 % to 250 % on a Chinese solar companies.

According to a study of union- Economic Policy Institute in the U.S. decreased between 2001 and 2008 2.4 million jobs lost, which is attributed mainly to the imbalance in US-China trade. A study by the Brookings Institution anticipates that the demand of U.S. consumers will fail as a growth engine for the world economy through the financial crisis. It is expected that the U.S. itself must export more to bring its trade balance in order. With a weak growth of the world economy as a whole, the policy will therefore move more towards protectionism.