Protectionism in International Trade

Protectionism is a form of action that is capable of inhibiting imports. Protectionism can be regarded as an economic policy that aims to protect industries within a country to competition with other countries, through various forms such as high tariffs (tariff barrier) on imported goods, non-tariff barriers including quotas, subsidies and other strategic trade barriers, which can be utilized to control the market (UNSD 1992).

History of the emerging protectionism began in the 1930s as a response of the free market. Rapid industrial progress contributes in increasing international trade. Countries with rapid industrial progress have a surplus of industrial products that require expansion of the market. Motivation for market expansion was then used to encourage the growth of free markets that became increasingly intense in the entire world. However, it does not mean the free market can be received with open countries in the world.

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The emergence of protectionist measures initiated from the United States which apply the smooth-Hawley tariff policy. A policy of tariffs barrier on imported products directed to the protection of domestic agriculture that were attacked by the adverse effects of imported agricultural products from Europe. Import tariff in question was the rate charged on imported goods to raise the price of goods. With the rising prices of goods, it was expected that imports would not be more attractive than the local product. Import tariff was also simultaneously used as the main source of government revenue. For the United States, even the results of these rates was used to fund the military.

The issue of protectionism grew in the 1970s. During this period, the political hegemony of the United States economy experienced a downturn due to increased political and economic influence of the countries of Japan and the newly industrialized countries (Gilpin 2001). Competition in trade was becoming increasingly stringent and complex. It encourages greater efforts to protect the country. Protectionism is growing since the 1980s began to be called as a new protectionism. This new form of protectionism related to the various policies that are no longer based solely on rate. Countries started to use non-tariff barriers as protection efforts such as regional policy, national standards, protection for consumers and workers, health, the environment, to the quantity of goods exported within a specified period (Gilpin 2001).

Potectionism is certainly not in line with the principles of market liberalization are also supported by the World Trade Organization (WTO). WTO were also sighted liberal attempt to minimize the barriers on free trade. Various barriers to exports and imports carried the state as a form of protection is limited to go to the lowest level. Through the GATT (General Agreement on Rates and Trade) 1947, the WTO regulates many forms of protection which may or may not be done by a state.

In Article XI of the GATT in 1947 which states that the WTO member countries are not justified prohibit or restrict the export or import except with customs, taxes or other levies a tariff. Nevertheless, the WTO also has set the upper limit of the rate allowed by the state in accordance Schedule of commitment. The upper limit is even continuously strived to be reduced to the lowest level even zero.

Prohibition forms of trade barriers other than tariffs to make countries in the world have to think of other alternatives in order to remain able to protect their domestic industries. This also resulted in the emergence of a new style that is more protectionism refers to Non-Tariff Barriers to trade liberalization.

GATT regulations still have loopholes that allow countries to impose non-tariff protection policy. WTO still allows a country to take a policy that allows a country to perform a non-tariff barrier. State can do protection through various standards as a form of protection against certain interests relating to protect human, animal or plant health, or in accordance with Article XX of the GATT, the Agreement on Technical Barrier to Trade (TBT) and the Agreement on the Application of Sanitary and Phytosanitary measures (SPS).

Non-Tariff Barriers action followed by an increase in government action to expand exports and to support the industrial sector through export subsidies, loan guarantees, tax incentives for some specific industries. New protectionism ultimately requires expansion of government power to influence the pattern of trade and global economic activity. According to Joan Edelman Spero and Jeffrey A. Hart in his book “International Trade and Domestic Politics”, the pattern of non-trade issues such as environmental emergency is a new form of protectionism. There are at least five aspects that could serve as a new protectionism including sanitation, national standards, the area of regional policy, the environment, and protection of workers. These regulations form of health standards and sanitary systems (sewage system) that must be complied with importing countries that enter into a country. Environmental issues are the issues that are often used by countries to protect their domestic markets and products. Environmental problem is a problem that is considered to be part of a country's national interest.

References:

United Nation Sustainable Development. 1992. United Nations Conference on Environment & Development.
Gilpin, Robert. 2001. Global Political Economy: Understanding the International Economic Order. Priceton University Press.
General Agreement on Tarif and Trade 1947