Policymakers

Policymakers are faced with several problems when trying to administer import controls. First, most of the time such controls exact a huge price from domestic consumers. Import controls may mean that the most efficient sources of supply are not available. The result is either second- best product or higher costs for restricted supplies, which in turn cause customer service standards to drop and consumers to pay significantly higher prices. Even though these costs may be widely distributed among many consumers and are les obvious, the social cost of the controls may be damaging to the economy and subject to severe attack from individuals. However, these attacks are countries by pressure from protected groups that benefit from import restriction. For example, while citizens of the European Union may be forced by import controls to pay an elevated price for all the agricultural products they consume agriculture producers in the region benefit from higher incomes. Achieving a proper trade off is often difficult, if not impossible, for the policymaker.

A second major problem resulting from import controls is the downstream change in the composition of the import that may result. For the importation of copper ore is restricted, through either voluntary restraints or quotas, producing countries may opt to shift theirs production systems and produce copper wire instead, which they can export. As result, initially narrowly defined protectionist measures may snowball in order to protect one downstream industry after another.

Another major problem that the policy maker is that of efficiency. Import controls designed to provide breathing room to a domestic industry so it can either grow or recapture its competitive position often do not work. Rather than improve the productivity of an industry, such con troll may provide it with a level of safety and a cushion of increased income, subsequently causing it to lag behind in technological advancement.

One must also be aware of the corporate response to improve restrictions. Corporations faced with such restrictions can encourage their governments to erect similar barriers to protect them at home. The result is a gradually escalating set of trades' obstacles. In addition, corporations can make strategic use of such barriers by incorporating them in to their plans and exploiting them in order to gain market share. For example, some multinational corporations have pressed governments to initiate antidumping actions against their competitors