Why Government Intervention?
Protect Jobs and Industries
- Quota on Textiles to help the textile industry
- VERS to save local auto manufacturers
- Common Agricultural Policy (CAP) in Europe to save European Agricultural industry.
National Security
- aerospace, semiconductors, (e.g., $100 million subsidy to Sematech)
Retaliation
- If you don’t open your markets we will..
- Examples of cellular phones in Japan and intellectual property rights in China.
- Chances of a trade war.