1. John T. Cuddington and Ronald 1. McKinnon: "Free Trade versus
Protectionism: A Perspective"
Summarizing recent reconsiderations of the classical theory by Bhagwati, Ramaswami, and Johnson, Gerald Meier( 1973:7) concludes:
In terms of international welfare economics, free trade is a preferable situation to
no trade; restricted trade is also preferable to no trade; free trade is preferable to
restricted trade, except that an optimum tariff is preferable to free trade. . . . The
only first-best argument for tariff protection is that of optimizing the terms of trade.
The other arguments have noneconomic objectives, or are for suboptimal policies,
or are nonarguments for protection.
Kindleberger( 1973:77-78) has an interesting discussion of the worldwide rise in
tariffs and the League of Nations' attempt in 1927 to negotiate a tariff truce.
The interested reader is referred to Kindleberger( 1973) for a detailed account of
the deterioration in international trade and world output.
A counterexample, however, is the Cobden-Chevalier Treaty of 1860 between Britain and France.
The GATT, as initially negotiated in 1947, included only the non-communist,
developed nations. Since that time most less-developed countries have become parties to the agreement. Under Article 18 of the GATT, however, they have been
permitted to retain protective tariffs and import quotas "in order to implement programmes and policies of economic development designed to raise the general standard
of living of their people." The industrialized nations thus allowed unrestricted importation of LDC products without demanding reciprocal concessions. This has
greatly reduced the incentive for trade liberalization in the LDCs and, it could be
argued, has been partly responsible for their highly restrictive trade barriers that
evolved after World War IIand have, on balance, been retained to the present day.
As a result, most missed out on the world trade boom after 1947.
2. Rachel McCulloch: "Determinants and Implications of U.S. Trade
A smoothly functioning system of trade based upon comparative advantage will
not necessarily allow the United Statesto continue its present level of production in
any specific industry. Because each nation's comparative advantage shifts over time,
trade along lines of comparative advantage -- i.e., trade which produces greatest
overall benefits -- requires substantial internal adjustments. Typically, these include
the redeployment of labor and capital between industries, a process often accompanied by lower earnings or unemployment for some factors in the declining sectors.
On labor adjustment issues, see also Chapter 8( Deardorffand Stern) and Chapter 9
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Tariffs, Quotas, and Trade:The Politics of Protectionism.
Contributors: Walter Adams - Author, Ryan C. Amacher - Author, Sven W. Arndt - Author, Malcolm D. Bale - Author, John T. Cuddington - Author, Alan V. Deardorff - Author, Joel B. Dirlam - Author, Roger D. Hansen - Author, H. Robert Heller - Author, D. Gale Johnson - Author, Robert O. Keohane - Author, Michael W. Keran - Author, Rachel McCulloch - Author, Ronald I. McKinnon - Author, Gordon W. Smith - Author, Robert M. Stern - Author, Richard James Sweeney - Author, Robert D. Tollison - Author, Thomas D. Willett - Author.
Publisher: Institute for Contemporary Studies.
Place of publication: San Francisco.
Publication year: 1979.
Page number: 297.
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