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  • Essay / International trade and protectionism - 533

    International trade and protectionismThe benefits of globalization and open trade for the economy of any country are immense since international trade agreements and unilateral liberalization allow the adoption of low customs duties. However, these benefits do not accrue to the economy as a whole, and special interest groups often continually attempt to use government power to protect themselves from competing imports. The mechanism used by these interest groups to enforce such policies is often referred to as regulatory protectionism (Sykes 24). This has seen the proposal and implementation of numerous policies aimed at directing consumer purchases towards permitted goods and services. The goal of these policies is to overcome the presumed inability of the free market to create the highest social benefits in a market economy. These regulations are often shaped by public health or environmental concerns. Protectionism is on the rise due to the growing need to ease pressure on local businesses from imports. The belief that other countries are participating in unfair trade practices and current macroeconomic performance have also led to an increase in protectionism. Import competition is a concern as countries like the United States become increasingly dependent on international trade. The inevitable consequence of this trend is that an increasing proportion of the working population will depend on global trade for employment. It should also be noted that an increase in international trade affects certain sectors disproportionately. The call for protectionism can therefore be directly attributed to the decline in performance of several major sectors. Changes in comparative advantage are responsible for losses resulting from international competitiveness. It could be argued that such changes benefit the general economy by enabling more productive use of resources. However, they are extremely costly in the short term and these costs must be avoided by implementing protectionist measures. Although some sectors have benefited immensely from international trade, a few have not fared as well in this regard. In the United States, these industries include clothing and textiles, footwear, electronic products, basic steel and iron, and motor vehicles. In these sectors, other countries have a comparative advantage since production techniques in these areas have become quite standardized, meaning that relatively low-skilled workers are more than capable of producing these goods. Over time, rising domestic wages made production costs uncompetitive in the United States, meaning that capital inevitably moved to countries with lower wages...