International Trade and Protectionism

Introduction

International trade is the exchange of goods and services across national borders. It is one of the principal components of the global economy and a major source of economic interdependence.

States adopt different trade policies depending on their economic interests, strategic objectives, domestic industries and international commitments.

Core Concepts

International Trade: Exchange of goods and services between countries.

Exports: Goods and services sold to foreign markets.

Imports: Goods and services purchased from foreign markets.

Trade Balance: Difference between the value of exports and imports of goods, or, in broader contexts, goods and services.

Trade Surplus: A situation in which exports exceed imports under the relevant measure.

Trade Deficit: A situation in which imports exceed exports under the relevant measure.

Trade Liberalization

Trade Liberalization: Reduction of tariffs and other barriers to international trade.

Free Trade: International trade conducted with relatively low barriers.

Trade Facilitation: Measures designed to simplify and speed up customs and border procedures.

Trade Integration: Increasing economic integration through trade relationships and common trade rules.

Protectionism

Protectionism: Government policies intended to protect domestic producers from foreign competition.

Tariff: A tax or customs duty imposed on imported goods.

Import Quota: A quantitative restriction on the amount of a product that may be imported.

Import Licensing: A requirement that importers obtain government authorization for specified imports.

Local Content Requirement: A requirement that a specified proportion of a product or activity use domestic inputs.

Non-Tariff Barrier: A broad term for trade restrictions other than tariffs.

Trade Policy Instruments

Governments may use:

• Tariffs
• Quotas
• Import licensing
• Subsidies
• Technical regulations
• Sanitary measures
• Export restrictions
• Local content rules
• Government procurement rules
• Trade remedies

Subsidies

Subsidy: Government financial support or other economic benefit provided to a producer, industry or activity.

Export Subsidy: Government support specifically linked to exports, subject to applicable international trade rules.

Domestic Subsidy: Government support provided for domestic production or other economic activities.

Trade Remedies

Anti-Dumping Duty: A duty imposed under specified conditions in response to dumped imports causing or threatening injury to a domestic industry.

Countervailing Duty: A duty imposed to offset certain foreign subsidies causing or threatening injury to a domestic industry.

Safeguard Measure: A temporary trade restriction used under specified conditions in response to increased imports causing or threatening serious injury.

Strategic Trade Policy

Strategic Trade Policy: Government intervention in trade to pursue strategic economic or industrial objectives.

Industrial Policy: Government policies intended to influence industrial development and productive capacity.

Strategic Industry: An industry considered important for economic, technological, security or other national objectives.

Economic Security: Protection of essential economic capabilities and resilience against external disruptions or coercion.

Trade Wars

Trade War: Escalating trade restrictions between countries, often involving reciprocal tariffs or other measures.

Retaliatory Tariff: A tariff imposed in response to another country’s trade restrictions.

Trade Dispute: A disagreement concerning trade policies, market access or interpretation of trade rules.

Trade Conflict: A broader political or economic conflict involving competing trade interests.

Regional Trade Agreements

Regional Trade Agreement: An agreement establishing preferential trade relations among participating economies.

Free Trade Area: A group of economies reducing or eliminating internal trade barriers while generally maintaining separate external trade policies.

Customs Union: A group of economies with reduced or eliminated internal trade barriers and a common external tariff.

Common Market: A deeper form of integration allowing freer movement of goods, services and, subject to the arrangement, factors of production.

Economic Union: An advanced form of integration involving substantial coordination of economic policies.

Trade and Development

International trade can influence:

• Economic growth
• Employment
• Industrialization
• Consumer prices
• Export earnings
• Technology transfer
• Investment
• Government revenue
• Global supply chains

However, the effects of trade vary among countries, industries, firms and social groups.

Protectionism and Economic Nationalism

Economic Nationalism: An approach emphasizing domestic economic capabilities and national economic interests.

Import Substitution: A development strategy seeking to replace imported goods with domestically produced goods.

Export Promotion: Policies intended to increase exports and international competitiveness.

Strategic Autonomy: Capacity to maintain essential economic and strategic capabilities without excessive external dependence.

Trade and Geopolitics

Trade increasingly intersects with geopolitical competition.

Trade Weaponization: Use of trade relationships or restrictions to pursue strategic objectives.

Economic Coercion: Use or threatened use of economic measures to influence another actor’s behaviour.

De-Risking: Reducing exposure to economic or supply-chain vulnerabilities without necessarily ending economic relations.

Decoupling: Significant reduction or separation of economic relationships between countries or economic systems.

Key Distinctions

Tariff vs Quota: A tariff imposes a financial charge; a quota limits quantity.

Protectionism vs Trade Liberalization: Protectionism raises or maintains barriers; liberalization reduces them.

Anti-Dumping Duty vs Countervailing Duty: Anti-dumping duties address qualifying dumped imports; countervailing duties address qualifying subsidized imports.

Free Trade Area vs Customs Union: Both reduce internal trade barriers, but a customs union also applies a common external tariff.

De-Risking vs Decoupling: De-risking seeks to reduce vulnerabilities while retaining substantial economic relations; decoupling implies a much deeper separation.

Key Terms at a Glance

International Trade | Exports | Imports | Trade Balance | Trade Surplus | Trade Deficit | Trade Liberalization | Free Trade | Trade Facilitation | Protectionism | Tariff | Quota | Import Licensing | Non-Tariff Barrier | Subsidy | Anti-Dumping Duty | Countervailing Duty | Safeguard Measure | Strategic Trade Policy | Industrial Policy | Trade War | Retaliatory Tariff | Regional Trade Agreement | Free Trade Area | Customs Union | Common Market | Import Substitution | Export Promotion | Economic Coercion | De-Risking | Decoupling

Related Glossaries

WTO and International Trade Institutions | International Political Economy | Global Supply Chains | Economic Statecraft | Globalization | Geoeconomics