- Qualified arguments - may be better for non-economic reasons or expectation that longterm benefits are greater than short term costs
-Infant industry argument - New domestic industry needs time to establish itself, unable to compete w 'mature' competitor firms from abroad. Economies of scale - as a firm grows, it can lower costs. A country may have a comparative advantage in a good, but cannot specialise until in receives some protection as support. This protection must therefore be temporary.
Some difficulties: Gov may not know who needs it, protected industries may lack incentive to become more efficient, gov may continue to protect even after the industry has matured
-Strategic trade policy - Similar to infant industry argument, but applies to developed countries as well. Needed for high technology industries to achieve economies of scale and create a comparative advantage. Important for industries that are important to future economic growth. Protection in this case may not just require barriers, but also interventionist supply side policies such as low interest loans, tax advantages, gov financing of R&D.
Some difficulties - Hard to identify industries that will achieve economies of scale, difficulties in selecting protective policies. It is likely that most/all developed will protect the same industries at the same time, contradicting the idea of 'comparative advantage. Gov may protect these industries after protection isnt required.
-Tariffs as source of gov revenue - A lot of developing countries earn a lot of their gov budget from tariffs however there are issues w this. They are a regressive tax having negative impacts on income distribution and allocative efficiency. Relying on tariff revenues delays tax system reform. Tariffs should only be a temporary source of revenue, and should phase out as countries grow/ develop.
-Means to overcome balance of payment deficit - Deficit usually happens when imports>exports. Decreasing imports with barriers should theoretically correct the deficit, however other countries will retaliate with trade protection thus reducing exports as well. Trade protection may work in the short term for deficit emergencies, but not in the long term.
-Anti dumping - 'dumping' refers to selling a good in an international market at a price below the cost of making it (usually as a result of a subsidy). Anti dumping refers to adding tariffs/ quotas to raise the price of the good.
The difficulties of anti-dumping is that is is hard to justify what is and isnt dumping, and trade- protection such as subsidies are what causes it in the first place.
-Protection for domestic jobs -Supposedly, when trade barriers are implemented, consumption shifts from import supply to more domestic supply, increasing the domestic demand for labour, thus reducing unemployment.
The difficulty with this is that other countries then face higher unemployment because they are exporting less and they may retaliate by adding trade barriers themselves. If the gov wants to increase employment in the economy, fiscal, monetary or supply side policies are more effective. If the gov wants to raise employments in a certain industry, then subsidies are better than import restrictions (tariffs and quotas) because subsidies have less negative effects.