1. Free trade consists simply in letting people buy and sell as they want to buy and sell. Protective tariffs are as much applications of force as are blockading squadrons, and their objective is the same: to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people form trading.
-Henry George, 1886
Created: Jan 2007 by Jim Luke.

2. International Trade and Policy
Comparative Advantage Review and Extensions
World Production Possibility Frontier
Effects of Trade
Created: Jan 2007 by Jim Luke.

3. Common Trade Restrictions
Tariffs – tax on transaction
Specific tariffs
Ad valorem tariffs
Revenue vs. Prohibitive Tariffs
Quotas
Loan Subsidies
Domestic Content Limits
Unique product/process regulations
Created: Jan 2007 by Jim Luke.

4. Effects of trade restrictions
inefficient welfare programs for the domestic producers
Consumers
Suffer & pay
Costs spread-out
Politically quiet
Producers
Large & focused benefits
Political “horse-trading” & lobbying
Created: Jan 2007 by Jim Luke.

5. Quotas in Practice Producers lobby Congress for quotas
Reward domestic producers with higher prices
Reward foreign producers with the right to sell goods in US
Lack of opposition from consumers
Diffuse benefits
Created: Jan 2007 by Jim Luke.

6. Tarriffs vs. Quotas Tariff and quotas
identical effects on price
same change in quantity demanded
U.S. consumers suffer loss of consumer surplus
U.S. producers gain
Who gets the additional revenue?
Tariff: government
Quota: producer w/ rights
Created: Jan 2007 by Jim Luke.

7. Other Trade Restrictions
Export Subsidies
Low-interest loans
Domestic Content Limits
Unique industry/product regulations
Health
Safety
technical standards may discriminate against foreign goods
Created: Jan 2007 by Jim Luke.

8. Free-trade & Agreements
Free Trade Zones
European Union
Bilaterals
Agreements
GATT & WTO
NAFTA
Paris Convention
FTAA
CAFTA
Created: Jan 2007 by Jim Luke.

9. Rhetoric & Trade Supporters of Protectionism: Rarely say so
“Fair” Trade
“Competitiveness”
Much so-called “Free Trade” isn’t
Created: Jan 2007 by Jim Luke.

10. Arguments “Supporting” Trade Restrictions
National Defense Argument
Infant Industry Argument
Antidumping Argument
Jobs and Income Argument
Declining Industries Argument
Created: Jan 2007 by Jim Luke.

11. Additional Problems with Trade Restrictions
Often requires protecting downstream stages of production
Wasted resources seeking favored protections
Other countries often retaliate,
reducing gains from trade
Costs of enforcment
Social & Political Risks
Created: Jan 2007 by Jim Luke.