Question

Identify the trade regulation concept described in each scenario. Tiles protectionism free trade trade war Pairs Country A and country B want to develop their respective export markets. Both countries have highly developed agricultural, industrial, and service sectors. The countries decide to initially lower trade barriers and eventually remove them completely. arrowBoth Country A has an agrarian economy with an emerging industrial sector. To allow domestic industries to grow, country A applies quotas on all industrial products except those that are used as resources. arrowBoth Country A passes an economic policy that will indirectly give its own companies an advantage over country B’s companies. Country B alleges that the policy violates the countries’ trade agreement and imposes retaliatory tariffs.

Answer 1

The first instance is a healthy standard that has been achieved in the European Union and other places. The countries impose no tariffs onto foreign products and thus there is high competition. This is called free trade.
The second case is an instance of protectionism. Protectionism is the economic model where one closes off his borders and imposes tariffs on the products that are foreign. This gives a bump to internal producers but it can also be harmful for some people because the prices are higher than they should be if there was competition.
Finally, the third example showcases trade war. Both countries use legal means like tariffs to promote their own industries to expand and get a share of the market in other countries or steal a share from other industrial players.