Final answer:
To protect Malawi's infant coffee industry, implementing tariffs or quotas on imported coffee can ensure the development of the local market. Free competition is another option, though it may negatively impact the nascent local industry. Considering all potential impacts and WTO guidelines is crucial in decision-making. The correct option is d. Open the market to free competition.
Step-by-step explanation:
As the person in charge of trade policy for Malawi and given the request for tariff protection by Malawian coffee producers against cheap Tanzanian coffee, several policy options are to be considered. Malawian coffee is an infant industry, and the introduction of tariffs on imported coffee could protect it from being outcompeted by established Tanzanian coffee producers. This tariff policy allows Malawian coffee to develop and strengthen within the domestic market before facing direct competition.
Alternatively, enforcing quotas on coffee imports could also be a method to limit the volume of foreign coffee entering the market, ensuring that Malawian coffee growers have a substantial share of the domestic market. However, this could raise the price of coffee in Malawi. Opening the market to free competition is another option, which could drive down prices for consumers but may result in the local coffee industry struggling to survive against more established providers.
While subsidies for Tanzanian coffee are not relevant in this context, a subsidy for the local Malawian coffee industry may be considered as a form of support that would help lower production costs and increase competitiveness without directly raising the cost of imports for consumers. Doing so would also align with the ethical and equitable policy practices in the global market, as governed by institutions such as the WTO, which encourages trade policies that aim to reduce barriers and facilitate fair competition.