Free trade is where trade between two or more countries can be done without the interference of protection, which may lead to the advantage or disadvantage to one of the parties involved in the trade (Parry & Kemp 2002, p. 93). Protection refers to and action by the government which is designed to give the domestic producer and artificial advantage over a foreign producer. Types of protection can be classified in three different categories. These are:
• Those which impose quantitative restrictions on imports including quotas, import licenses and embargoes.
• Those which lead to a cost advantage to producers such as subsidies.
• Those which lead to the increase of price in foreign products such as tariffs (Parry & Kemp 2002, p. 93).
The main goal of protection is to encourage production in the domestic markets that are protected. The main beneficiaries from protection include those owners and workers in the protected industries and in some cases the government benefits from......
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