Protectionism - Barriers to Trade (Quizlet Revision Activity)

Here are some key terms relating to barriers to trade (protectionism). Check your understanding with this updated Quizlet Revision Activity!

Key terms on barriers to trade (protectionism)

Ad valorem tariff

An import tax charged as percentage of the price

Administrative barriers

Regulations on imports such as animal welfare standards and energy efficiency requirements

Anti-dumping duty

Tariff on goods deemed to be causing injury to domestic producers of competing products

Competitive devaluation

When a country deliberately intervenes to drive down the value of their currency to improve price competitiveness

Customs Union

Countries that have free trade between them but apply a common external tariff to imports

Dumping

Occurs when goods are exported at a price less than their normal value or at less than production cost.

Embargo

A complete ban on importing a good perhaps done on grounds of consumer protection

Exchange controls

Limits on foreign exchange that can move between countries - also known as capital controls

Export subsidy

Payment to a domestic firm to encourage them to sell surplus output in another country

Import licence

The need to obtain a permit for importing a product

Infant industry argument

Protectionism for a fledgling sector to allow them to develop a cost advantage / economics of scale

Local content law

Requirement that products sold in a particular country be at least partly made there

Murky protectionism

Attempts to distort trade via state aid, bail-outs, laws on takeovers and managed currencies

Quota

Physical limit on the quantity of a good that can be imported into a country

Specific tariff

A set amount (e.g. £s, $s) per unit imported

Voluntary export restraint

Where two countries make an agreement to limit the volume of their exports to one another

​In this video we revise the welfare losses that can arise when a government introduces an import tariff.

In this revision video we look at the issue of import dumping and the response of countries using retaliatory anti-dumping duties.

​Import dumping happens when firms sell their exports at below average cost or below their normal prices in the home market. The former implies predatory pricing – which is illegal. Dumping might be part-financed by government subsidies.

Non-Tariff Barriers (NTBs) may include any policy measures other than tariffs that can impact trade flows. As average import tariffs in the world economy have fallen, so NTBs have become more common!