International trade (protection)- Australia

Protection: *Free trade enables greater competition, higher quality goods, economic growth and lower prices. *Free trade increases real incomes as prices are lower and consumers buying power will be increased. Through specialization countries can produce outside their PPF Arguments for protection: *Protection benefits small developing industries whereas free trade benefits the general public *Governments can us protection to gain political advantage-they 'buy' votes from the industries they protect *Cost of protection for the PMV and …

…uses *In the short term removing protection creates unemployment but over time the efficient industries will absorb the resources *Reducing trade barriers will result in a net increase in employment *Protection reduces 'real' income and SOL. *Australia has reduced its protection wall and is now a leader in World Trade Organization forums in seeking commitment to free trade principals *By lowering protection, consumers' benefit, input costs are lowered and efficient industries are able to grow.