3.14 Summary: Part B
In Part B of this chapter we have looked at the way trade patterns develop and noted that there are cultural and other similarities which tend to promote trade between similar countries. However, there are limits to this theme because of the disadvantages associated with being overly dependent on a single product or market. The downside of independence is that it may deprive a country of the benefits of goods and services available from other countries, but which have been eschewed in favour of the development of domestic industries. There is a strong argument for interdependence in which nations acknowledge their place in what is effectively a world trade ecosystem. No nation can forever stand apart from the rest of the world without suffering some disadvantage.
We noted that protectionism increases in times of national economic duress, and registered, perhaps with legitimate dismay, that protectionism seems to be rising across the world despite, or maybe because of, the potential elimination of tariffs under WTO, which began on 1 January, 1995.
We looked briefly at an extensive range of tariff and non-tariff barriers to trade. Such barriers seldom achieve what they are supposed to achieve and usually penalise consumers in the country setting up the barriers. However, there are often strong political and economic arguments for trade barriers. Infant industries may benefit from the imposition of tariffs, especially where first-mover advantages may accrue. Also, defence-related industries may qualify for protection in the interests of national self-sufficiency in armaments.
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