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American legislation and protectionism

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The GATT and the WTO contributed to a very strong reduction of barriers in the international business. A majority of the countries are conscious of the benefit of free trade; nevertheless, the governments are always subject to the pressure of some companies who try to obtain or to protect their market by various means of protectionism. We will study the American legislation concerning the international business, the laws governing the environment and the role of the American companies who allow the application of protectionist measures. The principles of these laws were taken by many industrialized countries, and in particular, the anti-dumping law became the subject of conflicts in WTO.

The safeguard clause corresponds to section 201 of the Trade Act of 1974. Article XIX of GATT and WTO agreements on the safeguard provisions allows countries to impose new import restrictions if a domestic industry was severely damaged due to a rapid increase in imports. Objective: The purpose of the safeguard clause is to allow domestic industries concerned to adapt to changing competition and restructuring. A rapid increase in imports may have significant adverse impacts to certain players in the national economy, domestic firms compete with imported products are particularly affected. These companies have to adapt by increasing their productivity and / or by lying off employees. According to its proponents, the safeguard clause will reduce the costs of these adjustments temporarily protecting domestic firms from imports.

It may still criticize the justification for the safeguard clause. Indeed, there are many circumstances in which companies must adapt to change: changes in energy prices, changing consumer tastes, changes in regulations. We may wonder why the increase import justifies state intervention by protectionist measures, while the other changes that may affect business activity and lead to adjustment costs that are not subject to any measure of adjustment.

Tags: GATT, WTO, American legislation, state intervention, business activity

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