The Economic and Financial Committee (EFC)
The question of counteracting protectionist measures in the global economy and the effects they have on international trade in order to stimulate economic growth.
Currently the USA is enforcing steep trade tariffs on goods from the EU, China, Canada, and Mexico, due to her president believing that the US’ trade deficits are hurting her domestic economy. This is setting a global precedent on protectionist measures.
Protectionism refers to the implementation of restricting or restraining international trade, often with the intention of protecting domestic industries from foreign competition, by means of import quotas, tariffs, government subsidies or product standards.
Raising the prices of imports to equal or exceeding local prices, by for instance limiting the number of products that can be imported over a set period of time, makes them less attractive than domestic products. Thus, more domestic products than products from foreign countries are bought, which will benefit the growth of the domestic economy.
However, the long-term protectionism could be counterproductive, as it has the potential to harm the standard of living and the economic growth. Without competition efficiency, innovations may decrease. Consequently, industries may be prevented from improving and developing further their own products. Therefore, free and open trade is promoted, from which the world economy may benefit from.