Approaches to trade protectionism measures vary widely between international institutions and independent analysts. Crucially, however, there is consensus on two core elements: (1) the discrimination of foreign economic operators and (2) trade-restrictiveness. A further dimension that complements these two aspects is the extent to which public measures distort markets.
The trade protectionism approach in the 21st century world is widely viewed as outdated and unconventional by many countries around the globe. Yet, it is still the standing peak of many others. No nation has all the commodity it needs. Some countries may have an abundance in certain resources, while others may lack them.
Economists argued that protectionism results in deadweight loss, in that the benefits of free trade far outweigh the losses– as much as 100 to 1. Some analysts also argued that if the protectionist route is followed, more efficient industries will have less scope to expand, and overall output and economic welfare will suffer. Protectionism has also been accused of being one of the major causes of wars. 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 primarily due to British tariffs and taxes; as well as the protective policies preceding World war 1 and 2.
Moreover, studies have shown that the welfare of protected interest groups may be advanced, but always at the expense of the larger society. It is often argued that protectionism is good for the country, but those arguments are rhetorical, appealing to and arousing public sentiment. Protectionism does not necessarily advance public welfare. In fact, public welfare stands to be hurt by trade protectionism. A second notion pertains to government’s motive. Studies have shown that one very strong force – politics, and it is not much the international political relations, but the domestic political pressures and competition. Politicians of all factions have vied for serving the interests of politically capable and aggressive interest groups. While this may be part of the nature of democratic political systems, where the government responds to the pressures of the politically active and resourceful interest groups, the drawback is the loss incurred by large sections of the population whose welfare is compromised by trade protectionism (Abboushi, 2016).
The Case for and against Protectionism
Advantages
* To protect infant industries, especially for developing countries in industrialisation
* To protect geriatric industries, especially for developed countries losing their comparative advantage
* To protect employment
* To prevent dumping, where a good is exported below costs of production to gain market share
* To correct a balance of payments deficit, discourages importing
* To restrict imports from countries whose health and safety regulations and environmental regulations are less stringent
* For strategic reasons, for example, in times of war
* To raise tax revenue, tariffs act as a kind of tax. This is especially valuable to developing economies
* Ability to retaliate to the trade barriers of
* others
Disadvantages
* Inefficient resource allocation: trade barriers distort comparative advantage and discourage specialization
* Higher prices and less choice for consumers
* Less incentive for domestic producers to become more efficient
* It is difficult to remove trade barriers, as it could have an adverse effect on domestic producers
Guyana’s trade policy environment
The Ministry of Foreign Affairs is responsible for the development and the administration of Guyana’s foreign trade policies. In this respect, the Ministry implements the national trade agenda in coordination with other trade-related public and non-state agencies. In the last three decades, Guyana’s trade policies have become increasingly linked to the country’s overall foreign policy. At the regional level, and as a member of CARICOM, great importance is attached to its participation in the Community’s regional trade arrangements as the main vehicle to enhance the country’s integration in the world economy, and is fully committed to the realization of the CARICOM Single Market and Economy (CSME). Therefore, the country’s trade policy, including its external trade negotiations with third countries, is closely aligned with the overall trade policy of the Community.
Empirical evidence suggest that international trade leads to economic growth, provided that the policy measures and economic infrastructure are accommodative enough to adapt to changes in the financial and social outcomes that result from it. In addressing the cross border challenges, a well-functioning national competition regime is insufficient, and there are also problems with developing countries, as they lack the resources and and/or experience to tackle international competition challenges. This is so, despite the provision of extra territorial jurisdiction in competition law which also has limitations. As a result, some countries have entered into bilateral or regional treaties to solve these problems – but, these treaties have limited impact. As such, the competition authorities of many different countries have come together to promote International competition network. To this end, there is need for pushing international agreement on cooperation in competition (Vijayasri, 2013).
