Gecon Script
Refer to Mandy’s presentation, we can conclude that government intervention can influence the producers by increasing international competitive and lower their production. However, government intervention will bring harm to consumers and taxpayers. It will raise the price of imported and intermediate goods and increase taxes.
It is obviously that interventions by government in free trade through trade barriers benefit domestic producers and workers but impose welfare losses on consumers and/or taxpayers.
According to Question 3C, why are the consumers and/or taxpayers not able to generate enough political pressure to counter the imposition of trade barriers?
It is because free trade is not that good as the others. Per person gain from free trade is usually smaller than per person loss. Free trade will facilitate globalization, and more Multinational Enterprise will enter the domestics market. And the domestic company will be driven out. It may bring loss to the society, for example increase the unemployment rate and lower the quantity sold of domestic goods.
In order to tackle the above problem, government intervene the trading policy. The government intervention concentrates on with protecting the interests of society (normally producers). It protects people’ interests and achieve political objective (e.g. human right and environment).
If there is free trade, domestic workers will lose their jobs and unemployment will rise due to the low prices on imports. In order protect the employment, the government restrict imports and provide subsidy to boost the domestic economy, to raise the local employment.
For example, Japan's government set quotas on rice imports are aimed at protecting jobs in that country's agricultural sector. Also, the same motive underlay the establishment of the Common Agricultural Policy (CAP) by the European Union. The CAP was designed to protect the jobs of Europe's politically powerful farmers by restricting imports and guaranteeing
It is obviously that interventions by government in free trade through trade barriers benefit domestic producers and workers but impose welfare losses on consumers and/or taxpayers.
According to Question 3C, why are the consumers and/or taxpayers not able to generate enough political pressure to counter the imposition of trade barriers?
It is because free trade is not that good as the others. Per person gain from free trade is usually smaller than per person loss. Free trade will facilitate globalization, and more Multinational Enterprise will enter the domestics market. And the domestic company will be driven out. It may bring loss to the society, for example increase the unemployment rate and lower the quantity sold of domestic goods.
In order to tackle the above problem, government intervene the trading policy. The government intervention concentrates on with protecting the interests of society (normally producers). It protects people’ interests and achieve political objective (e.g. human right and environment).
If there is free trade, domestic workers will lose their jobs and unemployment will rise due to the low prices on imports. In order protect the employment, the government restrict imports and provide subsidy to boost the domestic economy, to raise the local employment.
For example, Japan's government set quotas on rice imports are aimed at protecting jobs in that country's agricultural sector. Also, the same motive underlay the establishment of the Common Agricultural Policy (CAP) by the European Union. The CAP was designed to protect the jobs of Europe's politically powerful farmers by restricting imports and guaranteeing