Question

The united states appears at times to have a totally schizophrenic attitude toward protectionism. the united states was the country that proposed the establishment of the world trade organization as early as the late 1940s, and was also the only industrialized country that refused to ratify this at that time. the united states has consistently argued on the side of multinational free trade in gatt rounds, and yet maintains many protectionist laws such as those which reserve oil shipments from alaska to u.s. flag carriers. how can you explain this apparent lack of national consistency on this issue?

Answer 1

The swinging positions adopted by the US in international trade matters differ in accordance to the direction in which trade is happening.

On one hand, when the US claims for the supression of trade borders, taxes and dutie,s and for worldwide market openings, the US is thinking about exporting as cheap as possible. Like this, American goods are comercialized abroad at a low price and therefore, by the law of demand, high quantities of those goods will be demanded at that cheap price by foreign consumers. This is translated into economic growth for US companies that expand the size of their businesses abroad.

On the other hand, sometimes the US has been a clear supporter of protectionist economic measures. The main aim of promoting such measures is to protect national industries that are not very profitable and that cannot compete in the national markets against the cheap price of imports coming from foreign countrie. Those much cheaper imports are demanded by most consumers over national goods. To avoid bankruptcy in those uncompetitive sectors, duties and taxes are set to limit foreign trade inside its borders.