Trade Protectionism

Protection is any attempt by the government to give the domestic producer an artificial advantage over a foreign producer. The government can protect its industries in three ways: restricting the quantity of imports (quotas), lowering the price for domestic producers (subsidy) or increasing the price of imports (tariffs). Australia now stands at the crossroads of two paths. Should we continue as we are, reducing tariffs, which since the mid 80’s has seen Australia’s ratio …

…removal of tariffs imports begin to look more attractive to the consumer. The result: a large negative figure for the balance on goods and services, which, is the largest single determinant for the size of the CAD. The Australian economy may benefit greatly from a reduction in protection. However many individuals will be left out of job if Australia continues its current trend. The government must now think if economic stability is worth this loss.