4. Problems and Applications Q4 For each of the following statements, indicate which argument for restricting trade is being utilized. Statements The Jobs Argument The National-Security Argument The Infant-Industry Argument The Unfair-Competition Argument The Protection-as-a-Bargaining-Chip Argument (A) We should restrict the importation of electric cars until our own electric car industry is mature enough to compete with foreign firms. (B) We should limit the importation of Japanese automobiles unless Japan reduces its restrictions on agricultural imports. (C) We should place a tariff on Chinese-made tires to help prevent domestic tire employees from being laid off. (D) We should subsidize our computer industry because China subsidizes its computer industry.

Statements      Arguments

A                      The Infant-Industry Argument

B                      The Protection-as-a-Bargaining-Chip Argument

C                      The Jobs Argument

D                      The Unfair-Competition Argument

Explanation:

The Jobs Argument:  Domestic jobs need to be protected for the good of the national economy, according to this argument.

The National-Security Argument: Some products and services are, by their nature, issues reserved under national security.  To expose the internal security systems of a nation may have untold consequences.

The Infant-Industry Argument: Nascent industries require domestic protection from foreign competitors if they must grow to competitive levels.

The Unfair-Competition Argument: This is more pronounced in developing countries without the manufacturing facilities to compete fairly with developed economies.

The Protection-as-a Bargaining-Chip Argument is argues that trade restrictions may be imposed to force other countries to reverse or remove trade restrictions.

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