Question

8. The arguments for restricting trade Suppose there is a policy proposal to increase trade restrictions on imported microprocessors to the United States. Read the following scenario and answer the question that follows. Domestic producers of microprocessors send a lobbyist to the U.S. government to request that the government impose trade restrictions on imports of microprocessors. The lobbyist claims that producers in other countries receive subsidies to export microprocessors and that domestic suppliers can't compete in the international marketplace. Which of the following justifications is the lobbyist using to support their argument in favor of the trade restriction on microprocessors? National-security argument Unfair-competition argument Infant-industry argument Using-protection-as-a-bargaining-chip argument Jobs argument

Answer 1

The lobbyist is utilizing the Unfair-competition argument to advocate for increased trade restrictions on imported microprocessors, stating that foreign subsidies to exporters create a competitive disadvantage for domestic producers.

Step-by-step explanation:

The lobbyist advocating for trade restrictions on imported microprocessors is using the Unfair-competition argument. This argument suggests that domestic producers are at a disadvantage because producers in other countries allegedly receive subsidies for exporting microprocessors. It is contended that these subsidies enable foreign competitors to offer lower prices or higher quality, which undercuts domestic businesses in the international marketplace.

While other arguments exist for restricting trade, such as the infant-industry argument (to help new industries establish themselves) or the national-security argument (to avoid dependence on key imports that might be cut off), in this scenario, the focus is on combating what domestic producers perceive as unfair trade practices due to foreign subsidies.

Trade policy is influenced by various factors and levels of government, including international treaties through the World Trade Organization, which generally advocate for reducing trade barriers. However, domestic special interests can still influence policy to protect their own industries.

Answer 2

The lobbyist is using the infant-industry argument to support their argument in favor of the trade restriction on microprocessors.

Step-by-step explanation:

The infant-industry argument is an economic rationale advocating temporary protection for emerging domestic industries. It posits that young industries need safeguarding through tariffs or subsidies during their initial stages to compete with established foreign counterparts. This protection allows them to mature, achieve economies of scale, and become competitive internationally.

Critics argue it may lead to inefficiencies or protectionism, while proponents assert its role in fostering domestic industrial growth and self-sufficiency. The debate over the effectiveness and duration of such protection remains central in trade policy discussions worldwide.