Import Protection and Export Subsidy

Posted on 19 January 2016 at 09:22

Governments in developing countries want to decrease imports and increase exports, to help the national economy
An export subsidy is paid by the government to a business when it makes a successful export
This is designed to encourage businesses to export more, and make it cheap to do so
Import protection laws are designed to stop countries importing too much
Customs duties and tariffs are taxes businesses have to pay when importing goods
Quotas are limits on the amount of items that can be imported from one country
An example of a quota is “only 7000 baguettes can be imported to the UK from France, per month”
You can get around quotas by sending the goods via another country – shipping the baguettes from France to Ireland, then to the UK… (BUT you don’t have to, because France and the UK are both in the European Union, so there are no trade restrictions – revise the EU)