Commercial policy Earlier we noted that countries benefit from trade international but despite this trade is

not fully liberalized. It is very common to find ourselves with more or less protectionist situations who try to
justify themselves with the following arguments a) Protect industries considered strategic for the security of
a country (defense industries for example). b) Protect certain national industrial sectors to guarantee the
employment that they generate or make possible the reconversion (steel industries for example). c) Protect
infant industries from those already developed in other industries countries is a way for them to develop and
settle. d) Try to combat the imbalances between exports and imports. e) As we will see in Chapter 15 the
integration process of the Union European Union allows the creation of a broader market in which produces
in a more efficient way but in turn that market more broad is protected from the entry of other products
from other markets. The processes of integration and regionalization of Economies favor protectionism. f)
The recessive phases of the economic cycle through which a country can pass they also constitute an
argument in favor of protectionism. Of this Thus going through a depressive phase of the cycle can lead
countries to carry out import substitution policies for example. With these arguments governments make use
of trade policy applied to the markets of goods exported or imported pretending with its implementation of
export promotion and the reduction of imports. The instruments of this policy are tariffs import quotas non-
tariff barriers and subsidies to the export. The tariffs A tariff is a tax that raises the price of the imported
product in the national market to protect the national product from competition ex- terior. What are the
effects of a tariff? To understand the economic effects that the establishment of a tariff can cause it is
necessary to compare the welfare of the agents before and after their establishment. For this reason we
again use the concept of consumer surplus and of the producer analyzed above. The establishment of a tariff
raises the price of the imported product in the domestic market; this affects the behavior of buyers and
sellers and tends to reduce the quantity demanded in the domestic market and to increase the quantity
offered. That is the tariff reduces the amount of imports and brings the domestic market closer to its balance
without international trade. This new situation favors some agents and hurts others. Among those harmed in
addition to the producer abroad we must highlight the various consumers of the imported good because a
price increase means a loss of purchasing power and a reduction in your well-being. This loss is channeled to
other agents which are national producers who earn in the form of higher sales and of course the State which
receives a transfer for income tariffs. To follow this explanation we rely on Figure 13.5. Let's analyze the
following case. Toys from China have a lower price than those made in Spain. In this initial situation the
International price is (P1) lower than the national equilibrium price (Pn). At that price (P1) the quantity
offered by domestic producers is (X1) while the quantity demanded is greater (X2). That excess demand
covers with toys from China being the volume of imports (X2 X1). If to protect the Spanish toy industry
against the Chinese competition a "a" amount tariff would be established the international price would go up
to P2. At that price the amount offered by the Spanish toy makers would increase to Xa 1 and the quantity
demanded in the Spanish market it would decrease until Xa 2 reducing the volume of imports (Xa 2 Xa one).
After the establishment of the tariff one of the agents that improves is the State since for each Chinese toy
that enters the Spanish market the amount "a" of the tariff will enter. The income that the public sector
would obtain Spanish are determined by the area of rectangle Ip (volume of imports by the amount of the
tariff) striped in red. Another agent that would improve his well-being with the establishment of the tariff is
the Spanish toy industry since by increasing the domestic price his surplus is greater (area P2kjP1).