Final answer:
Industries that were hampered by European authorities' actions against parallel trading are now employing nontariff barriers such as complex regulations and paperwork to curb imports and protect domestic markets. These measures increase indirect costs for foreign competitors while fostering local industry development, despite the potential downsides of inefficiency and limited consumer choice.
Step-by-step explanation:
After their initial efforts were halted by European authorities, some industries now try to curb parallel trade by implementing nontariff barriers. These nontariff barriers include a variety of measures such as stringent rules, regulations, inspections, and extensive paperwork, which are designed to make it more costly or difficult for products to be imported. Unlike tariffs that directly affect the price of imports, these measures indirectly increase costs for foreign competitors, thereby protecting domestic industries.
Protectionism refers to governmental policies that reduce or block imports to shield local industries from international competition. One such policy is import substitution industrialization, which restricts the importation of manufactured goods with the aim of fostering domestic industries until they can compete globally.
However, persistent protectionism can lead to inefficiency within protected industries and diminished welfare for consumers due to higher prices and reduced choice. The World Trade Organization (WTO), as the successor to the General Agreement on Tariffs and Trade (GATT), aims to negotiate the reduction of trade barriers on a global scale and to adjudicate international trade disputes.