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Relationships in Trade - Essay Example

Historically protectionism was aroused in a period of mercantilism’s development. This economic study propagandized restraining trade in order to protect domestic manufacturers. Beginning from XVIII century protectionism has been considered as a major doctrine in such European countries as Austria, Sweden, and Great Britain. Despite active advocacy of free trade, protectionism has managed to live till nowadays. For example, in March 2010 president of France, Nicolas Sarkozy, accused the United States in high protectionist measures, stating that if America wanted to fight against protectionism, then it should show better example (Paviot, 2010).
The policy of protectionism presupposes the usage of numerous restraining measures and government regulations to prevent national markets from foreign producers, decreasing import and encouraging local companies. With this aim countries may claim various policies that are directed to reduce competition between firms. Hence, the most popular method is setting tariffs and import quotas on imported goods. These measures increase price of the products in the domestic markets that in its turn reduces the quantity of imported goods. Moreover, frequently government uses direct subsidies, which are paid national companies for helping them to stay competitive and survive in changing market stipulations.

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Progress of commodity-money relations leads to formation of new policies, concerning international trade. Hence, today the query about urgency of free trade is given careful consideration, debating efficiency and appropriateness of government restrictions…
Relationships in Trade
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