Final answer:
Tafensoma has introduced nontariff barriers in the form of red-tape-intensive licenses, aiming to protect domestic industries but potentially leading to higher prices and reduced product quality due to less competition.
Step-by-step explanation:
The country of Tafensoma has adopted nontariff barriers as a trade restriction method by requiring imports to have red-tape-intensive licenses. Such barriers include extensive rules, regulations, and paperwork that make it more costly or difficult to import products. By imposing these kinds of restrictions, Tafensoma aims to protect its domestic firms and reduce competition from foreign companies. This form of protectionism can sometimes lead to a race to the bottom, where countries lower environmental or other standards to attract foreign investment. The World Trade Organization (WTO), successor to the General Agreement on Tariffs and Trade (GATT), often works to reduce these barriers and encourage free trade among nations.
While nontariff barriers can help shield domestic industries, they can also result in high prices, reduced production, and poor product quality due to decreased competition. Complex permit systems for importing vital goods can also contribute to government corruption, as firms may engage in bribery to secure easy access to necessary imports. In turn, this might result in a decline in expected job creation and economic welfare that protectionist policies like import substitution strategies are typically intended to promote.