What is the role of non-tariff barriers in protectionism?

Non-tariff barriers play a significant role in protectionism by restricting international trade through means other than tariffs. These barriers are implemented by governments to protect domestic industries and shield them from foreign competition. Non-tariff barriers can take various forms, including quotas, subsidies, technical barriers, licensing requirements, and product standards.

One of the main purposes of non-tariff barriers is to limit the quantity of imported goods entering a country. Quotas, for example, establish a maximum limit on the quantity of a specific product that can be imported. By restricting the quantity, domestic industries are given a chance to compete and maintain their market share. This helps protect domestic jobs and industries from being overwhelmed by foreign competition.

Subsidies are another form of non-tariff barrier used in protectionism. Governments provide financial assistance or incentives to domestic industries, making their products more competitive in the global market. By subsidizing domestic industries, governments aim to lower production costs, increase efficiency, and promote growth. This support helps protect domestic industries from foreign competitors who may have lower production costs or receive similar subsidies in their home countries.

Technical barriers, such as product standards and regulations, are also employed as non-tariff barriers. Governments may impose strict quality or safety standards on imported goods, making it difficult for foreign producers to meet these requirements. This can create additional costs and barriers for foreign companies, giving domestic industries a competitive advantage.

Licensing requirements are another non-tariff barrier used to restrict imports. Governments may require foreign companies to obtain licenses or permits to enter the domestic market. These requirements can be time-consuming, costly, and subject to bureaucratic processes, making it challenging for foreign companies to compete with domestic industries.

Overall, non-tariff barriers serve as effective tools for protectionism by limiting the entry of foreign goods and protecting domestic industries. While they aim to safeguard domestic industries and jobs, they can also lead to higher prices, reduced consumer choices, and potential retaliation from trading partners.