Question

"Unfair" Import Competition

Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as “unfair” import competition. Is such competition “unfair”? Do you think that this argument is in the best interests of (a) the people they represent, and/or (b) the country as a whole?

Answer 1

Answer: Trade Unions in developed nations often oppose imports from low-wage countries and advocate trade barriers to protect jobs from what they often characterize as “unfair” import competition.

Unions basically present certain reasons to support their arguments like:

(Agrument in interest of people they represent)

1.Protection to new industries: in their view products from low wage countries produce goods at lower price due to low input cost , hence it can led shut down of new industries or firms in that field.

2.Save from dumping: They also give this reason that dumpong of such goods and services will hamper the growth of domestic firms and led to loss.

3.Job Loss: This is the most prevalent argument that they present as in low wages countries products are more cheaper hence import will grow and domestic firms input cost will increase and they will not hire much.Hence agrument given to save employment by such trade barriers.

4.Self sufficient: this is more of political in nature than economic reasons.As believed self sufficiency will lead to better living standards.

I my opinion such arguments are more of biased w.r.t. people they represent and for the country as a whole because:

1.Trade barriers often fuel the inefficiencies and consumers are at the loss.As if free trade hampers certain some industries they it also lead to growth in efficient industries as well.

2.Agrument of dumping can also be curtailed by measures like anti dumping duty etc for this there is no need to encourage trade barriers.

3.Protection of jobs can not be achieved untill free trade is supported as trade barriers attract same actions from other side hence will further lead to disruption in market and further job loss.

To conclude trade barriers are short term solutions rather detrimental in long run.Going by Comparative advantage theory country should produce those goods that it can produce more efficiently than other countries and buy those goods that it cannot produce that efficiently.

As restrictions hampers countries economy , curtail consumer choices and led to unemployment as well.

Hope it helps!

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