The Artificial Barriers to Trade

629 Words2 Pages
There are generally only two conventionally accepted justifications for artificial barriers to trade, the "infant industry" argument or national security. Infant industries are new projects society decides it wants to pay to support until the businesses become solvent on their own, usually in high entry-cost infrastructure or capital projects like power generation or large-scale manufacturing. Imposing artificially high costs on imports can also sustain otherwise marginal industries like agriculture, or tactically important defense manufacturing capabilities, that would leave a nation hostage to embargo as many cases throughout history demonstrate back to the ancient Greeks. There are undoubtedly immense savings to be achieved harmonizing currencies, laws, import and immigration standards that reduce the free flow of inputs to production including labor, and raise the shelf price of goods, which then raise the wage demand and thus all other costs through any economy. Savings from inspection and compliance cost over the NAFTA experience already suggest that a North American Euro-style integration could further reduce administrative burdens of tax conformance for exporters and thus shareholders, duplicate licensing and liability compliance, and the frictional cost of currency exchange not only for travelers and shippers, but for the whole nation if central and commercial banks did not have to exchange currency. These savings are not without cost however. Every dollar of
Open Document