Protectionism

Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents claim that protectionist policies shield the producers, businesses, and workers of the import-competing sector in the country from foreign competitors. However, they also reduce trade and adversely affect consumers in general (by raising the cost of imported goods), and harm the producers and workers in export sectors, both in the country implementing protectionist policies, and in the countries protected against.

There is a consensus among economists that protectionism has a negative effect on economic growth and economic welfare,[1][2][3][4] while free trade, deregulation, and the reduction of trade barriers has a significantly positive effect on economic growth.[2][5][6][7][8][9] Some scholars have implicated protectionism as the cause of some economic crises, most notably the Great Depression.[10] However, trade liberalization can sometimes result in large and unequally distributed losses and gains, and can, in the short run, cause significant economic dislocation of workers in import-competing sectors.[11]

Free Trade and Protection
Political poster from the Liberal Party displaying their views on the differences between an economy based on Free Trade and Protectionism. The Free Trade shop is shown as full to the brim with customers due to its low prices. The shop based upon Protectionism is shown as suffering from high prices and a lack of customers, with animosity between the business owner and the regulator.

Protectionist policies

Emblem of the Ligue Nationale pour la Défense du Franc
Logo of Belgium's National League for the Franc's Defense, 1924

A variety of policies have been used to achieve protectionist goals. These include:

  • Protection of technologies, patents, technical and scientific knowledge [12][13][14]
  • Prevent foreign investors from taking control of domestic firms[15][16]
  • Tariffs: Typically, tariffs (or taxes) are imposed on imported goods. Tariff rates usually vary according to the type of goods imported. Import tariffs will increase the cost to importers, and increase the price of imported goods in the local markets, thus lowering the quantity of goods imported, to favor local producers. Tariffs may also be imposed on exports, and in an economy with floating exchange rates, export tariffs have similar effects as import tariffs. However, since export tariffs are often perceived as "hurting" local industries, while import tariffs are perceived as "helping" local industries, export tariffs are seldom implemented.
  • Import quotas: To reduce the quantity and therefore increase the market price of imported goods. The economic effects of an import quota is similar to that of a tariff, except that the tax revenue gain from a tariff will instead be distributed to those who receive import licenses. Economists often suggest that import licenses be auctioned to the highest bidder, or that import quotas be replaced by an equivalent tariff.
  • Administrative barriers: Countries are sometimes accused of using their various administrative rules (e.g. regarding food safety, environmental standards, electrical safety, etc.) as a way to introduce barriers to imports.
  • Anti-dumping legislation: "Dumping" is the practice of firms selling to export markets at lower prices than are charged in domestic markets. Supporters of anti-dumping laws argue that they prevent import of cheaper foreign goods that would cause local firms to close down. However, in practice, anti-dumping laws are usually used to impose trade tariffs on foreign exporters.
  • Direct subsidies: Government subsidies (in the form of lump-sum payments or cheap loans) are sometimes given to local firms that cannot compete well against imports. These subsidies are purported to "protect" local jobs, and to help local firms adjust to the world markets.
  • Export subsidies: Export subsidies are often used by governments to increase exports. Export subsidies have the opposite effect of export tariffs because exporters get payment, which is a percentage or proportion of the value of exported. Export subsidies increase the amount of trade, and in a country with floating exchange rates, have effects similar to import subsidies.
  • Exchange rate control: A government may intervene in the foreign exchange market to lower the value of its currency by selling its currency in the foreign exchange market. Doing so will raise the cost of imports and lower the cost of exports, leading to an improvement in its trade balance. However, such a policy is only effective in the short run, as it will lead to higher inflation in the country in the long run, which will in turn raise the real cost of exports, and reduce the relative price of imports.
  • International patent systems: There is an argument for viewing national patent systems as a cloak for protectionist trade policies at a national level. Two strands of this argument exist: one when patents held by one country form part of a system of exploitable relative advantage in trade negotiations against another, and a second where adhering to a worldwide system of patents confers "good citizenship" status despite 'de facto protectionism'. Peter Drahos explains that "States realized that patent systems could be used to cloak protectionist strategies. There were also reputational advantages for states to be seen to be sticking to intellectual property systems. One could attend the various revisions of the Paris and Berne conventions, participate in the cosmopolitan moral dialogue about the need to protect the fruits of authorial labor and inventive genius...knowing all the while that one's domestic intellectual property system was a handy protectionist weapon."[17]
  • Political campaigns advocating domestic consumption (e.g. the "Buy American" campaign in the United States, which could be seen as an extra-legal promotion of protectionism.)
  • Preferential governmental spending, such as the Buy American Act, federal legislation which called upon the United States government to prefer US-made products in its purchases.

In the modern trade arena many other initiatives besides tariffs have been called protectionist. For example, some commentators, such as Jagdish Bhagwati, see developed countries efforts in imposing their own labor or environmental standards as protectionism. Also, the imposition of restrictive certification procedures on imports are seen in this light.

Further, others point out that free trade agreements often have protectionist provisions such as intellectual property, copyright, and patent restrictions that benefit large corporations. These provisions restrict trade in music, movies, pharmaceuticals, software, and other manufactured items to high cost producers with quotas from low cost producers set to zero.[18]

History

Tariff Rates in Japan (1870-1960)
Tariff Rates in Japan (1870–1960)
Tariff Rates in Spain and Italy (1860-1910)
Tariff Rates in Spain and Italy (1860–1910)

Historically, protectionism was associated with economic theories such as mercantilism (which focused on achieving positive trade balance and accumulating gold), and import substitution.

In the 18th century, Adam Smith famously warned against the "interested sophistry" of industry, seeking to gain advantage at the cost of the consumers.[19] Friedrich List saw Adam Smith's views on free trade as disingenuous, believing that Smith advocated for freer trade so that British industry could lock out underdeveloped foreign competition.[20]

Some have argued that no major country has ever successfully industrialized without some form of economic protection.[21][22] Economic historian Paul Bairoch wrote that "historically, free trade is the exception and protectionism the rule".[23]

According to economic historians Douglas Irwin and Kevin O'Rourke, "shocks that emanate from brief financial crises tend to be transitory and have little long-run effect on trade policy, whereas those that play out over longer periods (early 1890s, early 1930s) may give rise to protectionism that is difficult to reverse. Regional wars also produce transitory shocks that have little impact on long-run trade policy, while global wars give rise to extensive government trade restrictions that can be difficult to reverse."[24]

One paper notes that sudden shifts in comparative advantage for specific countries have led said countries to become protectionist: "The shift in comparative advantage associated with the opening up of New World frontiers, and the subsequent “grain invasion” of Europe, led to higher agricultural tariffs from the late 1870s onwards, which as we have seen reversed the move toward freer trade that had characterized mid-nineteenth-century Europe. In the decades after World War II, Japan's rapid rise led to trade friction with other countries. Japan's recovery was accompanied by a sharp increase in its exports of certain product categories: cotton textiles in the 1950s, steel in the 1960s, automobiles in the 1970s, and electronics in the 1980s. In each case, the rapid expansion in Japan's exports created difficulties for its trading partners and the use of protectionism as a shock absorber."[24]

According to some political theorists, protectionism is advocated mainly by parties that hold far-left or left-wing economic positions, while economically right-wing political parties generally support free trade.[25][26][27][28][29]

In the United States

Droits de douane (France, UK, US)
Tariff Rates (France, UK, US)
Average Tariff Rates in USA (1821-2016)
Average Tariff Rates in US (1821–2016)
U.S Trade Balance (1895-2015)
US Trade Balance (1895–2015)

According to economic historian Douglas Irwin, a common myth about US trade policy is that low tariffs harmed American manufacturers in the early 19th century and then that high tariffs made the United States into a great industrial power in the late 19th century.[30] A review by the Economist of Irwin's 2017 book Clashing over Commerce: A History of US Trade Policy notes:[30]

Political dynamics would lead people to see a link between tariffs and the economic cycle that was not there. A boom would generate enough revenue for tariffs to fall, and when the bust came pressure would build to raise them again. By the time that happened, the economy would be recovering, giving the impression that tariff cuts caused the crash and the reverse generated the recovery. 'Mr Irwin' also attempts to debunk the idea that protectionism made America a great industrial power, a notion believed by some to offer lessons for developing countries today. As its share of global manufacturing powered from 23% in 1870 to 36% in 1913, the admittedly high tariffs of the time came with a cost, estimated at around 0.5% of GDP in the mid-1870s. In some industries, they might have sped up development by a few years. But American growth during its protectionist period was more to do with its abundant resources and openness to people and ideas.

According to Paul Bairoch, the United States was "the mother country and bastion of modern protectionism" since the end of the 18th century and until the post-World War II period.[31]

The Bush administration implemented tariffs on Chinese steel in 2002; according to a 2005 review of existing research on the tariff, all studies found that the tariffs caused more harm than gains to the US economy and employment.[32] The Obama administration implemented tariffs on Chinese tires between 2009 and 2012 as an anti-dumping measure; a 2016 study found that these tariffs had no impact on employment and wages in the US tire industry.[33]

In 2018, EU Trade Commissioner Cecilia Malmstrom stated that the US was "playing a dangerous game” in applying tariffs on steel and aluminium imports from most countries, and stated that she saw the Trump administration's decision to do so as both “pure protectionist” and “illegal”.[34]

In Europe

Europe became increasingly protectionist during the eighteenth century.[35] Economic historians Findlay and O'Rourke write that in "the immediate aftermath of the Napoleonic Wars, European trade policies were almost universally protectionist," with the exceptions being smaller countries such as the Netherlands and Denmark.[35]

Europe increasingly liberalized its trade during the 19th century.[36] Countries such as Britain, the Netherlands, Denmark, Portugal and Switzerland, and arguably Sweden and Belgium, had fully moved towards free trade prior to 1860.[36] Economic historians see the repeal of the Corn Laws in 1846 as the decisive shift toward free trade in Britain.[36][37] A 1990 study by the Harvard economic historian Jeffrey Williamsson showed that the Corn Laws (which imposed restrictions and tariffs on imported grain) substantially increased the cost of living for unskilled and skilled British workers, and hampered the British manufacturing sector by reducing the disposable incomes that British workers could have spent on manufactured goods.[38] The shift towards liberalization in Britain occurred in part due to "the influence of economists like David Ricardo", but also due to "the growing power of urban interests".[36]

Findlay and O'Rourke characterize the 1860 Cobden Chevalier treaty between France and the United Kingdom as "a decisive shift toward European free trade."[36] This treaty was followed by numerous free trade agreements: "France and Belgium signed a treaty in 1861; a Franco-Prussian treaty was signed in 1862; Italy entered the “network of Cobden-Chevalier treaties” in 1863 (Bairoch 1989, 40); Switzerland in 1864; Sweden, Norway, Spain, the Netherlands, and the Hanseatic towns in 1865; and Austria in 1866. By 1877, less than two decades after the Cobden Chevalier treaty and three decades after British Repeal, Germany “had virtually become a free trade country” (Bairoch, 41). Average duties on manufactured products had declined to 9–12% on the Continent, a far cry from the 50% British tariffs, and numerous prohibitions elsewhere, of the immediate post-Waterloo era (Bairoch, table 3, p. 6, and table 5, p. 42)."[36]

Some European powers did not liberalize during the 19th century, such as the Russian Empire and Austro-Hungarian Empire which remained highly protectionist. The Ottoman Empire also became increasingly protectionist.[39] In the Ottoman Empire's case, however, it previously had liberal free trade policies during the 18th to early 19th centuries, which British prime minister Benjamin Disraeli cited as "an instance of the injury done by unrestrained competition" in the 1846 Corn Laws debate, arguing that it destroyed what had been "some of the finest manufactures of the world" in 1812.[31]

The countries of Western Europe began to steadily liberalize their economies after World War II and the protectionism of the interwar period.[35]

In Canada

Since 1971 Canada has protected producers of eggs, milk, cheese, chickens, and turkeys with a system of supply management. Though prices for these foods in Canada exceed global prices, the farmers and processors have had the security of a stable market to finance their operations. Doubts about the safety of bovine growth hormone, sometimes used to boost dairy production, led to hearings before the Senate of Canada, resulting in a ban in Canada. Thus supply management of milk products is consumer protection of Canadians.[40]

In Quebec, the Federation of Quebec Maple Syrup Producers manages the supply of maple syrup.

In Latin America

According to one assessment, tariffs were "far higher" in Latin America than the rest of the world in the century prior to the Great Depression.[41][42]

Impact

There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth.[5][6][7][2][43][44]

Protectionism is frequently criticized by economists as harming the people it is meant to help. Mainstream economists instead support free trade.[19][45] The principle of comparative advantage shows that the gains from free trade outweigh any losses as free trade creates more jobs than it destroys because it allows countries to specialize in the production of goods and services in which they have a comparative advantage.[46] Protectionism results in deadweight loss; this loss to overall welfare gives no-one any benefit, unlike in a free market, where there is no such total loss. According to economist Stephen P. Magee, the benefits of free trade outweigh the losses by as much as 100 to 1.[47]

Living standards

A 2016 study found that "that trade typically favors the poor", as they spend a greater share of their earnings on goods, as free trade reduces the costs of goods. It is important to note that this study only took into account trade's impact on the cost of living, and left a richer exploration of supply-side impacts, particularly effects on income, to future research.[48] Other research found that China's entry to the WTO benefitted US consumers, as the price of Chinese goods were substantially reduced.[49] Harvard economist Dani Rodrik argues that while globalization and free trade does contribute to social problems, "a serious retreat into protectionism would hurt the many groups that benefit from trade and would result in the same kind of social conflicts that globalization itself generates. We have to recognize that erecting trade barriers will help in only a limited set of circumstances and that trade policies will rarely be the best response to the problems [of globalization]".[50]

Growth

According to economic historians Findlay and O'Rourke, there is a consensus in the economics literature that protectionist policies in the interwar period "hurt the world economy overall, although there is a debate about whether the effect was large or small."[35]

Economic historian Paul Bairoch argued that economic protection was positively correlated with economic and industrial growth during the 19th century. For example, GNP growth during Europe's "liberal period" in the middle of the century (where tariffs were at their lowest), averaged 1.7% per year, while industrial growth averaged 1.8% per year. However, during the protectionist era of the 1870s and 1890s, GNP growth averaged 2.6% per year, while industrial output grew at 3.8% per year, roughly twice as fast as it had during the liberal era of low tariffs and free trade.[51] One study found that tariffs imposed on manufactured goods increase economic growth in developing countries, and this growth impact remains even after the tariffs are repealed.[52]

According to Dartmouth economist Douglas Irwin, "that there is a correlation between high tariffs and growth in the late nineteenth century cannot be denied. But correlation is not causation... there is no reason for necessarily thinking that import protection was a good policy just because the economic outcome was good: the outcome could have been driven by factors completely unrelated to the tariff, or perhaps could have been even better in the absence of protection."[53] Irwin furthermore writes that "few observers have argued outright that the high tariffs caused such growth."[53]

According to Oxford economic historian Kevin O'Rourke, "It seems clear that protection was important for the growth of US manufacturing in the first half of the 19th century; but this does not necessarily imply that the tariff was beneficial for GDP growth. Protectionists have often pointed to German and American industrialization during this period as evidence in favour of their position, but economic growth is influenced by many factors other than trade policy, and it is important to control for these when assessing the links between tariffs and growth."[54]

A prominent 1999 study by Jeffrey A. Frankel and David H. Romer found, contrary to free trade skeptics' claims, while controlling for relevant factors, that trade does indeed have a positive impact on growth and incomes.[55]

Developing world

There is broad consensus among economists that free trade helps workers in developing countries, even though they are not subject to the stringent health and labour standards of developed countries. This is because "the growth of manufacturing—and of the myriad other jobs that the new export sector creates—has a ripple effect throughout the economy" that creates competition among producers, lifting wages and living conditions.[56] The Nobel laureates, Milton Friedman and Paul Krugman, have argued for free trade as a model for economic development.[5] Alan Greenspan, former chair of the American Federal Reserve, has criticized protectionist proposals as leading "to an atrophy of our competitive ability. ... If the protectionist route is followed, newer, more efficient industries will have less scope to expand, and overall output and economic welfare will suffer."[57]

Protectionists postulate that new industries may require protection from entrenched foreign competition in order to develop. This was Alexander Hamilton's argument in his "Report on Manufactures", and the primary reason why George Washington signed the Tariff Act of 1789. Mainstream economists do concede that tariffs can in the short-term help domestic industries to develop, but are contingent on the short-term nature of the protective tariffs and the ability of the government to pick the winners.[58][59] The problems are that protective tariffs will not be reduced after the infant industry reaches a foothold, and that governments will not pick industries that are likely to succeed.[59] Economists have identified a number of cases across different countries and industries where attempts to shelter infant industries failed.[60][61][62][63][64]

Economists such as Paul Krugman have speculated that those who support protectionism ostensibly to further the interests of workers in least developed countries are in fact being disingenuous, seeking only to protect jobs in developed countries.[65] Additionally, workers in the least developed countries only accept jobs if they are the best on offer, as all mutually consensual exchanges must be of benefit to both sides, or else they wouldn't be entered into freely. That they accept low-paying jobs from companies in developed countries shows that their other employment prospects are worse. A letter reprinted in the May 2010 edition of Econ Journal Watch identifies a similar sentiment against protectionism from 16 British economists at the beginning of the 20th century.[66]

Conflict

Protectionism has also been accused of being one of the major causes of war. Proponents of this theory point to the constant warfare in the 17th and 18th centuries among European countries whose governments were predominantly mercantilist and protectionist, the American Revolution, which came about ostensibly due to British tariffs and taxes, as well as the protective policies preceding both World War I and World War II. According to a slogan of Frédéric Bastiat (1801–1850), "When goods cannot cross borders, armies will."[67]

Current world trends

Protectionist measures taken 2008–2013 according to Global Trade Alert
Protectionist measures taken since 2008 according to Global Trade Alert.[68]

Since the end of World War II, it has been the stated policy of most First World countries to eliminate protectionism through free trade policies enforced by international treaties and organizations such as the World Trade Organization[69] Certain policies of First World governments have been criticized as protectionist, however, such as the Common Agricultural Policy[70] in the European Union, longstanding agricultural subsidies and proposed "Buy American" provisions[71] in economic recovery packages in the United States.

Heads of the G20 meeting in London on 2 April 2009 pledged "We will not repeat the historic mistakes of protectionism of previous eras". Adherence to this pledge is monitored by the Global Trade Alert,[72] providing up-to-date information and informed commentary to help ensure that the G20 pledge is met by maintaining confidence in the world trading system, detering beggar-thy-neighbor acts, and preserving the contribution that exports could play in the future recovery of the world economy.

Although they were reiterating what they had already committed to, last November in Washington, 17 of these 20 countries were reported by the World Bank as having imposed trade restrictive measures since then. In its report, the World Bank says most of the world's major economies are resorting to protectionist measures as the global economic slowdown begins to bite. Economists who have examined the impact of new trade-restrictive measures using detailed bilaterally monthly trade statistics estimated that new measures taken through late 2009 were distorting global merchandise trade by 0.25% to 0.5% (about $50 billion a year).[73]

Since then, however, President Donald Trump announced in January 2017 the U.S. was abandoning the TPP (Trans-Pacific Partnership) deal, saying, “We’re going to stop the ridiculous trade deals that have taken everybody out of our country and taken companies out of our country, and it’s going to be reversed.”[74]

See also

References

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External links

Animal protectionism

Animal protectionism is a position within animal rights theory that favors incremental change in pursuit of non-human animal interests. It is contrasted with abolitionism, the position that human beings have no moral right to use animals, and ought to have no legal right, no matter how the animals are treated.Animal protectionists agree with abolitionists that the animal welfare model of animal protection—whereby animals may be used as food, clothing, entertainment and in experiments so long as their suffering is regulated—has failed ethically and politically, but argue that its philosophy can be reformulated. Robert Garner of the University of Leicester, a leading academic protectionist, argues that animal use may in some circumstances be justified, though it should be better regulated, and that the pursuit of better treatment and incremental change is consistent with holding an abolitionist ideology. Gary Francione, professor of law at Rutgers School of Law-Newark and a leading abolitionist, calls this approach "new welfarism." He regards it as counter-productive because it wrongly persuades the public that the animals they use are being treated kindly, and that continued use is therefore justifiable. Francione regards the abolitionist position as the only one that can properly be called animal rights.

Canadian Action Party

The Canadian Action Party (CAP) (French: Parti action canadienne, PAC) was a Canadian federal political party founded in 1997 and deregistered on 31 March 2017.The party stood for Canadian nationalism, monetary and electoral reform, and opposed liberal globalization and free trade agreements that had been signed by the Canadian government.

Canadian cultural protectionism

Cultural protectionism in Canada has, since the mid-20th century, taken the form of conscious, interventionist attempts on the part of various Governments of Canada to promote Canadian cultural production and limit the effect of foreign culture on the domestic audience. Sharing a large border and a common language with the United States, Canadian politicians have perceived the need to preserve and support a culture separate from US-based North American culture in the globalized media arena. Canada's efforts to maintain its cultural differences from the US and Mexico have been balanced by countermeasures in trade arrangements, including the General Agreement on Tariffs and Trade (GATT) and the North American Free Trade Agreement (NAFTA).

Common external tariff

A common external tariff must be introduced when a group of countries forms a customs union. The same customs duties, import quotas, preferences or other non-tariff barriers to trade apply to all goods entering the area, regardless of which country within the area they are entering. It is designed to end re-exportation; but it may also inhibit imports from countries outside the customs union and thereby diminish consumer choice and support protectionism of industries based within the customs union.

The common external tariff is a mild form of economic union but may lead to further types of economic integration. In addition to having the same customs duties, the countries may have other common trade policies, such as having the same quotas, preferences or other non-tariff trade regulations apply to all goods entering the area, regardless of which country, within the area, they are entering.

Important examples of common external tariff are that of the Mercosur countries (Brazil, Argentina, Venezuela, Paraguay and Uruguay), the Common Customs Tariff of the Eurasian Economic Community customs union as well as the European Union Customs Union.

Conservatism in Colombia

Colombian Conservatism is a broad system of conservative political beliefs in Colombia that is characterized by protectionism, support for Catholic values, social stability and anti-totalitarianism. Its history began with the creation of political parties that represent conservatism in Colombia. One characteristics of Colombian Conservatism, in contrast to many other geographic subsets of conservatism, is its strong emphasis in protectionism, which is considered by many Colombian conservatives to be necessary to create a fair market.

Dingley Act

The Dingley Act of 1897 (ch. 11, 30 Stat. 151, July 24, 1897), introduced by U.S. Representative Nelson Dingley, Jr., of Maine, raised tariffs in United States to counteract the Wilson–Gorman Tariff Act of 1894, which had lowered rates. Came into effect under William McKinley the first year that he was in office. The McKinley administration wanted to slowly bring back the protectionism that was proposed by the Tariff of 1890.

Following the election of 1896, McKinley followed through with his promises for protectionism. Congress imposed duties on wool and hides which had been duty-free since 1872. Rates were increased on woolens, linens, silks, china, and sugar (the tax rates for which doubled). The Dingley Tariff remained in effect for twelve years, making it the longest-lived tariff in U.S. history. It was also the highest in U.S. history, averaging about 52% in its first year of operation. Over the life of the tariff, the rate averaged at around 47%.The Dingley Act remained in effect until the Payne-Aldrich Tariff Act of 1909.

Dumping (pricing policy)

Dumping, in economics, is a kind of injuring pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price below the normal price with an injuring effect. The objective of dumping is to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product.

Economic nationalism

Economic nationalism, or economic patriotism, economic populism, refers to an ideology that favors state interventionism over other market mechanisms, with policies such as domestic control of the economy, labor, and capital formation, even if this requires the imposition of tariffs and other restrictions on the movement of labor, goods and capital. In many cases, economic nationalists oppose globalization or at least question the benefits of unrestricted free trade. Economic nationalism is disputed as the doctrine of mercantilism, and as such favors protectionism.

Filipino First policy

The Filipino First (Tagalog: Pilipino Muna) refers to a policy first introduced and implemented by the administration of then Philippine President Carlos P. Garcia. Under the policy, Filipino-owned business is prioritized over its foreign counterparts, and the patronizing of Filipino-made products by Filipinos was also promoted.

Foreign exchange controls

Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Common foreign exchange controls include:

Banning the use of foreign currency within the country

Banning locals from possessing foreign currency

Restricting currency exchange to government-approved exchangers

Fixed exchange rates

Restrictions on the amount of currency that may be imported or exportedCountries with foreign exchange controls are also known as "Article 14 countries", after the provision in the International Monetary Fund agreement allowing exchange controls for transitional economies. Such controls used to be common in most countries, particularly poorer ones, until the 1990s when free trade and globalization started a trend towards economic liberalization. Today, countries that still impose exchange controls are the exception rather than the rule.

Often, foreign exchange controls can result in the creation of black markets to exchange the weaker currency for stronger currencies. This leads to a situation where the exchange rate for the foreign currency is much higher than the rate set by the government, and therefore creates a shadow currency exchange market. As such, it is unclear whether governments have the ability to enact effective exchange controls.

Free trade

Free trade is a trade policy that does not restrict imports or exports; it is the idea of the free market as applied to international trade. In government, free trade is predominately advocated by political parties that hold liberal economic positions, while economically left-wing and nationalist political parties generally support protectionism, the opposite of free trade.

Most nations are today members of the World Trade Organization (WTO) multilateral trade agreements. Free trade is additionally exemplified by the European Economic Area and the Mercosur, which have established open markets. However, most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes, and non-tariff barriers, such as regulatory legislation.

There is a broad consensus among economists that protectionism has a negative effect on economic growth and economic welfare, while free trade and the reduction of trade barriers has a positive effect on economic growth. However, liberalization of trade can cause significant and unequally distributed losses, and the economic dislocation of workers in import-competing sectors.

Liberal Protectionist

Liberal Protectionist was the name under which three candidates sought election to the House of Commons of Canada for ridings in Quebec in two elections in the early twentieth century.

The Liberal Party of Canada, at the time, was associated with the concept of free trade. Protectionists opposed the concept.

In the 1925 federal election, Léopold Doyon won 2,839 votes, 19.4% of the total, as the only opponent of the Liberal candidate in St. Henri. (Twenty years later he would be a Social Credit candidate in Hochelaga). Former Liberal MP Ruben Charles Laurier running as a Liberal Protectionist won 4,076 votes in St. James riding, 26.9% of the total, as the only opponent of the Liberal candidate.

In the 1930 federal election, Lyon William Jacobs won 2,723 votes, 10.2% of the total, placing third of four candidates in Laurier—Outremont riding.

Linguistic purism

Linguistic purism or linguistic protectionism is the practice of defining or recognizing one variety of a language as being purer or of intrinsically higher quality than other varieties. Linguistic purism was institutionalized through language academies (of which the 1572 Accademia della Crusca set a model example in Europe), and their decisions often have the force of law. Purism is a form of linguistic prescriptivism.The perceived or actual decline identified by the purists may take the form of change of vocabulary, syncretism of grammatical elements, or loanwords. The unwanted similarity is often with a neighboring language whose speakers are culturally or politically dominant. The abstract ideal may invoke logic, clarity, or the grammar of "classic" languages. It is often presented as conservative, as a "protection" of a language from the "aggression" of other languages or of "conservation" of the national Volksgeist, but is often innovative in defining a new standard. It is sometimes part of governmental language policy which is enforced in various ways.

Protectionist Party

The Protectionist Party was an Australian political party, formally organised from 1887 until 1909, with policies centred on protectionism. It advocated protective tariffs, arguing it would allow Australian industry to grow and provide employment. It had its greatest strength in Victoria and in the rural areas of New South Wales. Its most prominent leaders were Sir Edmund Barton and Alfred Deakin, who were the first and second prime ministers of Australia.

Tariff

A tariff is a form of regulation of foreign trade, a policy that taxes foreign products to encourage or protect domestic industry; a tax on imports or exports between sovereign states. The tariff is historically used to protect infant industries and to allow import substitution industrialization.

Tariff Reform League

The Tariff Reform League (TRL) was a protectionist British pressure group formed in 1903 to protest against what they considered to be unfair foreign imports and to advocate Imperial Preference to protect British industry from foreign competition. It was well funded and included politicians, intellectuals and businessmen, and was popular with the grassroots of the Conservative Party. It was internally opposed by the Unionist Free Food League (later Unionist Free Trade Club) but that had virtually disappeared as a viable force by 1910. By 1914 the Tariff Reform League had approximately 250,000 members. It is associated with the national campaign of Joseph Chamberlain, the most outspoken and charismatic supporter of Tariff Reform. The historian Bruce Murray has claimed that the TRL "possessed fewer prejudices against large-scale government expenditure than any other political group in Edwardian Britain".The League wanted to see the British Empire transformed into a single trading bloc, to compete with Germany and the United States. It favoured imposing duties on imports—as did Germany and the US—and the channelling of the money raised from these duties into social reforms. High import duties, the League claimed, would make increasing other taxes unnecessary. However opponents claimed that protection would mean dearer food, especially bread.

Sir Cyril Arthur Pearson was its chairman and, with Sir Harry Brittain, a founding member. Sir Henry Page Croft was chairman of its organisation committee. Pearson was later succeeded as chairman of the League by Viscount Ridley.In December 1903 Joseph Chamberlain announced the establishment of the Tariff Commission under the auspices of the Tariff Reform League. William Hewins the economist and first director of the London School of Economics from 1895 to 1903, was Secretary and Sir Robert Herbert, the first Premier of Queensland,Australia, was Chairman. The Commission consisted of 59 business men whose brief was to construct a "Scientific Tariff" which would achieve tariff reform objectives.[1]

Tariff Reform split the MPs of the Conservative Party and their government coalition allies in the Liberal Unionist Party and was the major factor in its landslide defeat in 1906 to the Liberals who advocated Free Trade. The Conservative Party under Bonar Law slightly downplayed Tariff Reform as official policy, abandoning Balfour's pledge that it would be put to the public in a referendum. Some wartime tariffs ("McKenna Duties") were, ironically, introduced by the Liberal Chancellor Reginald McKenna in 1915.

Shortly after the First World War the TRL was disbanded, although other organisations promoting the same cause were still active in the 1920s. One such organisation was the Fair Trade Union created by Joseph Chamberlain's son, Neville, and the Conservative MP Leo Amery. The British Commonwealth Union, led by Patrick Hannon, was another. Tariff Reform became official Conservative policy under Stanley Baldwin and was the major issue in the 1923 general election. The party lost its majority in the election and Tariff Reform was again dropped until the 1930s. Protectionism was eventually introduced by the Ottawa Agreements in 1932 (Joseph's son Neville Chamberlain was Chancellor at the time) and then dismantled at US insistence (Article VII of the wartime Lend Lease Agreement) in the 1940s.

Tariff of 1792

The Tariff of 1792 was the third of Alexander Hamilton's protective tariffs in the United States (first was the Hamilton tariff of 1789, second was the Tariff of 1790). Hamilton had persuaded the United States Congress to raise duties slightly in 1790, and he persuaded them to raise rates again in 1792, although still not to his satisfaction. Protectionism was one of the fulfillments of Hamilton's Report on Manufactures.

Trade restriction

A trade restriction is an artificial restriction on the trade of goods and/or services between two or more countries. It is the byproduct of protectionism. However, the term is controversial because what one part may see as a trade restriction another may see as a way to protect consumers from inferior, harmful or dangerous products. For instance Germany required the production of beer to adhere to its purity law. The law, originally implemented in Bavaria in 1516 and eventually becoming law for newly unified Germany in 1871, made many foreign beers unable to be sold in Germany as "beer". This law was struck down in 1987 by the European Court of Justice, but is still voluntarily followed by many German breweries.

United Romania Party

The United Romania Party (Partidul România Unită) is a Romanian nationalist political party. It was founded by former Social Democratic Party member Bogdan Diaconu, who announced the party's creation in 2014.

The party claims to adhere to a "national-democratic" doctrine based on the ideas of Romanian historian and politician Nicolae Iorga and centered on principles of social justice, economic protectionism, Romanian nationalism and anticorruption. According to a resolution adopted in September 2015, it opposes migrant quotas, same-sex marriage, adoption of the euro, and the Transatlantic Trade and Investment Partnership (TTIP), among others. In the 2016 Romanian legislative election, the party received 207,608 votes in the Senate election, and 196,602 in the election to the Chamber of Deputies, not achieving the parliamentary status.

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