Protectionism

 
 
 

Vocabulary

boost	shield (2)	competition
barrier	sufficient	domestic (3)
vehicle	subsidize	treatment (2)
tariff	abroad	manufacture
curtail	therefore	attractive (2)
hire	establish	institute (2)
impose	free trade	state-of-the-art
lag	edge out	innovation
renew	stagnate	exclusively
decline	support	stock market
global	suffer (2)	measure (2)
follow	default	domino effect
kind of	domino	self-sufficient
scarce	wave (3)	consumer
debt	subsidy	preferential
crisis	respond	of their own

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Video

 

 
 
 
 

Transcript

What is protectionism?

Protectionists want to shield their own country from foreign competition. So they establish barriers: the domestic economy receives preferential treatment; it’s being protected.

Protectionists often subsidize domestic industries. In the EU for example, that could be meat or electric vehicles.

Tariffs are imposed on products manufactured in foreign countries to curtail imports. That makes foreign products, televisions for example, more expensive, and therefore less attractive to consumers.

At first it may seem to work: domestic manufacturing gets a boost, more workers are hired and foreign competitors that produce more cheaply are edged out.

Bye-bye free trade.

But the products produced at home are more expensive and not always state-of-the-art. Since there’s no competition from abroad, innovation begins to lag.

Growth also starts to stagnate. Companies produce almost exclusively for the domestic market.

Neighboring countries respond by instituting protectionist measures of their own and introduce import tariffs.

This is what happened after the 1929 stock market crash in the U.S. Within just a few years, global trade declined by two-thirds.

Once one country institutes protectionist measures, others follow in a kind of domino effect. Over time, protectionist countries tend to develop self-sufficient economies.

Whether it’s carrots, apples or bananas, whatever doesn’t grow at home is no longer sold. Goods become more scarce, and growth suffers.

And what about the protectionists? They’re left with a mountain of debt: subsidies are expensive. History has shown that a wave of protectionism is often followed by a financial crisis and even government default.

That’s usually followed by renewed support for free trade.

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Questions

1. Do protectionists tend to be isolationists or globalists? Do they want to increase or decrease foreign imports?

2. Why do they want to curtail imports? How do they limit imports?

3. Their hitherto trading partners carry on as usual. Is this right or wrong?

4. Do they only limit imports and not interfere with domestic industries?

5. Things are positive in the short-term. Yes or no? What happens in the short-term?

6. Will everything remain good in the long-term? What happens in the long-term?

7. Did the report give any historical examples? Is there a cycle?

8. Do you think this video was pro-free trade, anti-free trade (protectionist), neither, in the middle or neutral?

 
 

A. Who are your country’s main trading partners? What are some major imports and exports?

B. Does your country have complete free trade or are there certain trade barriers?

C. How do people feel about free trade versus protectionism? Does it vary?

D. What will happen in the future?

E. Should there be free trade or protectionism or something in between?