Protectionis

m
Associated
with ToT
Bop
Ann Alex

 INTRODUCTION
Protectionism
Definition types

Influence about terms of trade, and balance of p

ayments.

Terms of trade

Balance of payments

ONTENTS

Protectionism
Protectionism aims to protect domestic pro
ducersform foreign competition .

Method of Protectionism

Quota
Tarif
Exchange control
Embargo
Voluntary export restraint

 TERMS OF TRADE

There is an example...
China and U.S. trade with each ot
her in a variety of goods. One kin
d of the good is sugar. China imp
orts skittles from America while
U.S imports Dabaitu from China.
Children love sweet skittles .so th
is kind of sugar has a large marke
t in China.
NOW, Chinese gov is unhappy. To
protect the domestic industry ,it
would add a tariff on skittles.
As china purchased a large numb
er of skittles. It can force down pr
ice of skittles by tariffs soon.

 Imports
price of skittles decrease.

Skittles discounted to attr

act Chinese consumers. T
herefore more people will
buy the Skittles with lowe
r prices.(import price decr
eases)

MPI decreses

ToT increases

 Similarly, assume that Dab

aitu accounts for a significa
nt proportion of the world
s sugar market. Now, impo
se a quotas on it.
terms of trade increase
As restricting the supply of exp
orts will drive up their price an
d so increase the purchase po
wer of Dabaitu.

ToT

 TERMS OF TRADE
ToT=index of Exports price over index of imports price
protectionism

To improve the terms of trade

 But, it may also provoke r

etaliation.

Of course, such action distorts trade and it

will reduce the global output.

 Balance of payments

Balance of payments

Imposing tariffs by a government may encourage consu

mers to consume more domestic products than buying i
mports.

Disadvantage
However, this action may provoke retaliation. Foreign g
overnments will impose their own trade restrictions to r
etaliate. International trade would decline and global o
utput would fall. [In the short-term, the current accoun
t will be boosted.]
France announced a ban on imports of Chinese product
ion of peanuts, chair and footwear.

Dumping and Anti-dumping

Dumping means that the price of the products in other
countries are lower than the ex factory price, and the ai
m is to compete with the local products and gain the m
arket.
Anti-dumping means the country countermeasure forei
gn goods in the domestic market due to the dumping. G
enerally is to impose the general import tax on the dum
ping of foreign goods, and then increase the additional t
ax. So that can not be sold so cheap.
Solar panels

ALEX

ANN