Arguments for Trade Barriers

Abstract

Our analysis of Chapter 8 and 9 was quite clear in one respect: except in the case of achieving the terms of trade effects or as safeguard measures, trade barriers cause a reduction in national and world welfare. Our conclusions were reached mostly under conditions of perfectly functioning markets. It should thus not be surprising that in the real world, where markets, in general, do not function perfectly we also find quite an intensive use of trade barriers. As we will show in this chapter it might be legitimate to use some intervention in circumstances of non-functioning or missing markets, but the trade policy instrument will rarely be best policy at hand. Often it will be the ‘easiest to use’ policy at hand or even the fastest to show results policy, only in a few cases will it be the best policy.