2nd – Trade Protection For The Less Developed Countries

 Less Developed Countries – advantage on exporting raw materials.

 Highly Developed Countries – advantage on exporting finished goods.
 Free trade – LDC’s had a slim chance to industrialize their country.

3rd – Forms of Trade Protection

Protection – refers to an advantage given to domestic producers in competing

against foreign goods in the market.

 Tariffs – tax imposed to goods/imports as they enter the country. Levied as a

specified ad valorem percentage of the value of imports.
 Quotas – quantitative restrictions on limiting imports of a particular product to
a specific number of units. Only those with import license are allowed to bring
goods within the country.
 Exchange Controls – the central bank restricts the sale of foreign exchange
(like USD) to importers. Only those with permission from central bank to buy
foreign exchange have the ability to import.
 Import Prohibition – the strongest form of import control. Prohibits the
importation of certain categories of goods.
 State Trading – governments, sometimes grants monopoly importing rights to
state enterprises.
 Government Regulations – these constitute a sort of protection for the
domestic products.

4th – Arguments for Tariffs

 Infant Industry Arguments

 Local Employment
 Local Standards
 Military Self-Sufficiency
 Balance of Trade
 Sources of Revenue