Question

Why would countries promote protectionist laws, while also negotiate for freer trade internationally?

a) To create a balance between domestic and international interests.
b) To discourage international trade altogether.
c) To prioritize domestic industries in negotiations.
d) To enhance economic self-sufficiency.

Answer 1

Countries use protectionist measures to safeguard domestic interests, yet they negotiate international agreements for the broader benefits of free trade and to counteract domestic lobbying pressures. This approach aims to strike a balance between national economic security and global market participation.

Step-by-step explanation:

Countries might promote protectionist laws while negotiating for freer trade to create a balance between guarding domestic industries and participating in the global market. Protectionist measures like tariffs and quotas on imports can protect local industries from foreign competition, ensuring employment and economic activity within a country.

However, engaging in international trade agreements like those offered by the WTO can help reduce trade barriers overall, which benefits consumers with lower prices and more variety. Such agreements may also restrain a country’s special interest groups, preventing them from exerting excessive influence on trade policies.

Politicians can use the obligations of these agreements as leverage to resist pressure from domestic industry lobbying efforts to implement protectionist policies.