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Protectionism vs Free Trade.

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Presentation on theme: "Protectionism vs Free Trade."— Presentation transcript:

1 Protectionism vs Free Trade

2 Protectionism Protectionism is the practice of putting limits on foreign trade to protect businesses at home.

3 Protectionism Some of the reasons in favor of protectionism are:
Foreign competition can lower the demand for products made at home. Companies at home need to be protected from unfair foreign competition. Industries that make products related to national defense need to be protected. The use of cheap labor in other countries can lower wages or threaten jobs at home. A country can become too dependent on another country for important products like oil, steel, or grain. Other countries might not have the same environmental or human rights standards.

4 Trade Barriers To limit competition from other countries, governments put up trade barriers to keep foreign products out. A tariff is a tax placed on imports to increase their price in the domestic market. A quota is a limit placed on the quantities of a product that can be imported. An embargo is when the government decides to stop an import or export of a product.

5 Free Trade Supporters of free trade believe there should be no limits on trade.

6 Free Trade It opens up new markets in other countries.
The benefits of free trade are: It opens up new markets in other countries. It creates new jobs, especially in areas related to global trade. Competition forces businesses to be more efficient and productive. Consumers have more choice in the variety, price, and quality of products. It promotes cultural understanding and cooperation between countries. It helps all countries raise their standard of living.

7 Trade Alliances To reduce limits on trade more countries are forming trade alliances with each other. In a trade alliance, several countries merge their economies into one huge market.

8 Trade Alliances Some of the major trade alliances in the world today are: NAFTA European Union (EU) Association of Southeast Asian Nations (ASEAN)

9 Trade Alliances NAFTA (North American Free Trade Agreement) was controversial because some workers would be displaced when trade barriers were lowered.




13 Examine the cartoon below.
Is it for or against free trade? What are the costs of free trade What are the benefits of free trade?

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