International Trade Policy Problems

Throughout the world, countries engage in international trade every day. The result of international trade is that it produces mutual benefits among the countries that are involved. However, when a country engages in trade protection, it hurts both the domestic consumers and foreign export industries. Three arguments that are used to promote trade barriers are the national security argument, the infant industry argument, and the dumping argument. Although these three arguments have their pros, such as protecting domestic industries from foreign competitors, they also have their flaws. The national security argument is designed to promote trade barriers by stating that free trade may develop international conflict. The advantage of having trade barriers is that it will promote autarky, or economic independence. As a country, you don’t want to become too dependent on another country for goods. Countries would be self sufficient and that would result in the protection of domestic industries. The protection of the domestic industries might sound nice, but when this happens it restricts competition by limiting availability of foreign goods. When foreign goods are limited, it forces the domestic products price to go up, therefore causing consumers to buy more expensive products. Free trade creates more competition among producers around the world, which then lowers prices and creates a bigger diversity of goods.
The infant industry argument promotes trade barriers by saying that newly industrializing countries should require a temporary period of trade protection in order to mature. It is important for industries to raise their skill level from the exporting of raw materials to becoming industrial producers of finished products. The protection of trade barriers would benefit these countries, but would eventually become a problem. Usually when infant industries rely on trade barriers to help them develop, they continue to use the protection even after they are mature