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The World Trade Organisation has a policy of allowing member countries to gradually lower their trade barriers so that domestic producers can make appropriate adjustments. Explain how trade barriers can benefit the domestic economy and evaluate the ration
Member rating: No Rating | Words: 803 | Submitted: Tue Sep 25 2007
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The World Trade Organisation has a policy of allowing member countries to gradually lower their trade barriers so that domestic producers can make appropriate adjustments. Explain how trade barriers can benefit the domestic economy and evaluate the rationale behind WTO policy. (25) The imposition of trade barriers is a form of protectionism - policy of sheltering domestic industries from foreign competition. As the world become more globalise and linked economically, there is also increasing resistance among companies and workers who face losses in income and jobs hence advocating the need for protectionism. Trade barriers such as the imposition of taxes can enable the development and growth of domestic firms and infant industry as well as the protection of sunset industries. Tariffs imposed will allow domestic firms to increase production from 0Q1 to 0Q2 as it shifts the supply curve of imports up since the tariff adds to the foreign producer's cost of...
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