Protectionism: the benefits, losses and whose interest?

There is no single country may be forced to impose trade liberalism, a deficit of international trading will drive them to practice protectionism of trading as to impose trade restrictive tariff or the like, regardless the rich or the poor countries. This is mainly because no one country was willing to bear the loss possibility of international trade. International trade has many opportunities to obtain for any country in the world, the profitability depends on the ability to create goods production quality competitiveness.

It is natural when a Country who trade internationally trying to do a lot of exports rather than imports for some reason want to earn more profits. Restrictions on international trade seek to minimize the inter-State trade activities among others by imposing tariff barriers, import quotas and some other ways to limit the amount of imports. Protection is aimed at keeping the conditions of supply of jobs for the local community but the condition over time can lead to a global recession (Krueger: 1993).

Some countries such as Japan and Brazil, objected to the protectionism (Maxfield, and Nolt: 1990), other Countries that reject protectionism include South Korea, Taiwan, Turkey, Chile, Colombia, Costa Rica, Hong Kong, Israel, Mexico, Norway, Singapore, Switzerland, and Thailand. State group encourages Americans not to protection against their trade export goods. Ongoing protectionism (Halpin: 2005) will slow the progression of the trading volume which in turn leads to the symptoms of the global economic crisis because of the limited traffic trade in goods and services between countries.

A country such as France for example, the French Government encourages its ranks to help the production of automobile industry and car manufacturers strive for being retained in the French interior. Similarly, Americans who promote the slogan "Buy American" alleged U.S. efforts to strengthen trading position of their products in the U.S. domestically translated as trading protection efforts by the State of United States trading partners. Actually, the decision to protection measures can be and naturally made by the Government of a State to maintain or increase the ability of the State in economic activity (Baumol: 1967) increased the number of job supply. However, if many countries simultaneously enforce protection policies then such action may be able to slow the growth of the global economy.

Protectionism is Reasonable in International Trade Agreements

No one wants to lose money on the international trade practice. International trade is the exchange of capital goods and services in the international border to boost GDP. Industrialization encourages the growth of transportation; globalization, multinational corporations, and outsourcing all have a huge impact on the international trade system. Increased international trade is vital to the continuation of globalization. International trade is a source of economic income for advanced countries. Without The international trade, nations would be shortages of goods and services produced within the boundaries of their own country.

Developed countries may also conduct trade protection if they are in deficit or trade their goods less competitive when compared to its trading partners. Is not this a homo homini Lupus principle or zero sum game?

Regulation of international trade

Traditional trade is regulated through bilateral agreements between the two countries, for centuries under mercantilism they restrict the flow of international trade (Krasner: 1976) Free trade is usually supported by a nation that has a strong economy to their advantage, such as a strategic international trade practices imposed tariff protection as applied by the United States and Europe. The International trade rules that made the world Trade Organization at the global level and some other areas such as the Mercosur agreement in South America, in the North American Free Trade Agreement (NAFTA) between the United States, Canada and Mexico and the European Union between 27 independent states 2005, in Buenos Aires talking about plans to establish the Free Trade Area of the Americas (FTAA) failed largely because of opposition from the population of Latin America countries. Similar agreements such as the Multilateral Ageement on Investment (MAI) have also failed in recent years.

Risks in International Trade

Risk could be occurred in any kind of business activities anywhere and any time, no exception with international business activities and usually business protection has been done attempt to protect local business. Risks (Cushman: 1983) involved in the International trade can be divided into two main groups are: Economic Risks can occur as the risk of insolvency of the buyer, the risk of default, the failure of the buyer to pay the amount due within six months after the due date, the risk of nonacceptance, surrender of economic sovereignty, foreign exchange risk, vulnerability to changing standards and regulations in other countries. In addition there is a political risk, among others, could form the risk of cancellation or nonrenewal of export or import license, the risk of war, expropriation or confiscation risk, the risk of loss from an import ban after the delivery of goods, transfer of risk-imposition of exchange controls by the importer of foreign countries or currency, political handover of sovereignty, the political influence of the importers and relations with other countries.

Protectionism is the economic policy to impede trade between countries (Deardorff: 1998), through methods such as tariffs on imported goods, limiting quotas, restrictions and other government regulations designed to discourage imports, and prevent foreign control of local markets and companies. This policy is siding with the anti-globalization, and contrasts with free trade, where government barriers to trade to be kept to a minimum. The term is widely used in an economic context where protectionism refers to policies protection companies and workers in a country that seeks to restrict and regulate commerce with foreign nations for the benefit of their trading profitability. It is natural that all the countries involved in trade have always wanted to make a profit and not vice versa. This condition can occur in poor countries or in developed countries.

So really there is no single country may be forced to impose trade liberalism, because when they run a trade deficit, then there is a tendency of the country also do the natural thing and began to impose trade restrictive tariff or the like.

Policies can be used to achieve goals such protectionism (Milner and Yoffie: 1989): Tariffs, rates usually charged on imported goods. Rates vary according to the type of imported goods. Import rates will increase the cost of the importer and the rising prices of imported goods in the local market, thus lowering the amount of imported goods. Also imposed tariffs on exports, such policies usually have a political purpose. Import quotas, to reduce the number and increase the market of imported goods. Economic effects of the tariff quota with, except that the income tax rates instead will get distributed to those who receive import licenses. Administrative barriers, countries sometimes use a variety of administrative regulations (eg food safety, environmental standards, electrical safety, etc) as a way of inhibiting imports. Anti-dumping legislation, anti dumping is a form of international price discrimination by firms or exporting country, which sell goods at lower prices in foreign markets than in the domestic market itself, in order to gain an advantage over products the exports. Direct subsidies, government subsidies are sometimes given to local companies that can not compete well against foreign imports. Subsidies mean to protect local workers and to determine foreign trade tariffs on exporters. Export subsidies, export subsidies used by the government to boost exports. Export subsidies are the opposite of export tariffs. Exporters are paid a percentage of their exports. Export subsidies increase the amount of trade, and in a country with a floating exchange rate there are effects similar to import subsidies.

Protectionism Reflects Trading Nation Proud of Nationalism

As an example, Indonesia is one country who applies protectionism system. A total of 17 countries from 20 countries were present at the meeting of the G 20 (Delgado and Soares: 2005) to implement protectionist action to protect the economies of their countries. Indonesia is one country that it is considered to protectionism and is trying to protect its economy progress, simply because Indonesia is facing a global economic crisis.

If Indonesia is implementing protectionism, then there are advantages and disadvantages. One of the drawbacks is the obstruction of access and relations with other countries in the fields of trade and investment. In this regard, Indonesia bilateral relations must continue to run, ranging from trade to foreign loans.

An advantage is if Indonesia can implement more protectionists could protect domestic products (Dunoff – Wash and Lee: 1992), developing existing products that do not need to depend on foreign products. When that has been done then it is possible the rapid progress of Indonesia's production capacity. Indonesian people who had less confidence in the Indonesian products would be more interested in buying imported products.

These conditions have an impact on the Indonesian economy, if the people of Indonesia have a high sense of nationalism, they will buy domestic products. Furthermore the role of government is to provide an opportunity for small and medium entrepreneurs to further develop. With these efforts the Indonesian economy will probably improving. As a result of free trade and the development of the Indonesian economy disrupted generate unemployment and poverty, and it has been understand that the number of poor people in Indonesia increased sharply which may be reduced by the creation of new jobs; hence logically to improve the economic condition of Indonesia needs to impose protectionism. Indonesian Institute of Sciences (LIPI) said in 2008, a total of 41.70 million poor people, equivalent to 21.6 % of the total population of Indonesia. Central Statistics Agency (BPS) in 2007 revealed a population of 37.17 million poor people or 16.58 %. LIPI estimate the poverty rate in 2009 at the level of 43 million people, or 22 %, while the National Development Planning Agency (Bappenas) estimated the number of poor in 2009 the number jumped to 33.714 million or 14.87 % of the total population of Indonesia.

International Trade Protectionism and its risks

Increasingly liberal world trade demands high competitiveness of Indonesian products in the global market, while Indonesia does not have its own industry that can provide competitive advantage especially with international high quality industry products and efficient mass production. Actually, the economic prosperity of a country can be obtained through international trade are mutual benefits (Buckley and Casson: 1988) to the parties who are selling and buying internationally, however, can such condition be achieved? While it looks simple difference gap between rich and poor countries can be observed clearly.

Country's competitiveness (Navickas, Sujeta, and Vojtovich: 2011) depends on the capacity of the country's industry to continue to be able to innovate and grow. Therefore, although it is believed to give a lot of benefits, some people are skeptical about the benefits obtained through international trade with free trade system.

International trade openness that encourages globalization is characterized by the development of information technology (Manuel Castells: 1999) innovation system, trade, political reform, trans-nationalization of financial systems, and investment. Can poor countries in the world take advantage of the openness of international markets and compete in the global marketplace? What are the benefits of international trade openness? Does the poor country in the world have of international trade competitiveness? How to create trade competitiveness? What is the policy for improving the competitiveness of the economy? How do the underdeveloped countries answer these questions without having to have the expertise, capital, high technology to make highquality goods, while that in many poor countries do not have some of these requirements. So it seems with the economic globalization economic system freely without restrictions is a mirage for poor countries to achieve the ideals to compete with developed countries in international trade are embracing free market economic system with no protection.

The Ability of Poor Countries Facing the Open Sistem of International Trade

Most countries Poor countries have to follow the flow of international free trade by signing the General Agreement on Tariffs and Trade (GATT) resulted in the formation of the World Trade Organization (WTO) and the declaration of Asia Pacific Economic Cooperation (APEC) on the system of free trade and investment in full force in 2010 for developed countries and 2020 for developing countries (Soeharto, 1994).

Through various international agreements, clearly it will inevitably create competition getting tougher and the quality of goods produced should be in good quality for international trade and in an effort to attract multinational investment. The question that arises then is: Can the poor countries take advantage of the openness of international markets and compete in the global marketplace?‖ If they can not afford, concequently, the poor countries are simply utilized as a world product markets (Siti Aminah Chaniago, 2013).

Most poor countries export products to the international market in the form of traditional products in the form of raw materials and products of agribusiness (A. Malian Husni, 2004). Agribusiness actors in the international market such as importers face huge buyer or advanced manufacturing. Such a position is likely to harm and weaken the country due to the large volume of poor state purchases made by the industrial market and the small number of buyers. The weakness of the pile because of the tendency of the homogeneity of the resulting products with products produced by developed countries.

The impoverished country in the world free trade agreement is relatively less profitable. Global markets can be significant international markets in other countries and domestic market that is increasingly filled with imported products. Looking at these poor conditions, it is feared that the impact of globalization will be a negative for the poor countries. For example, in the publication of The Global Competitiveness Report has published by the World Economic Forum in 2008 (Klaus Schwab, Michael Porter: 2008) shows how the inability of Indonesia's competitiveness in the global competition. In 2008, Indonesia's competitiveness ranking is based on Growth Competitiveness Index ranks 55th of 134 countries. Indonesia's achievements in 2008 were relatively no improvement compared to achievements in 2007 which debuted at No. 54 out of 131 countries. The data showed how difficult are the poor countries to compete with the rich countries.

The Increased competitiveness needs to be done because poor countries have a great potential to be able to do it. Availability of raw materials, labor, and technology should be able to relatively abundant developed further.

Benefits of International Trade Openness

It is really like a fist fight world is divided into several classes for a fairer match. Categorized heavyweight boxer fighting with opponents in the heavyweight well balanced. But what happens, the world business fight today this would be done by the heavyweight against lightweight contender, rich countries against poor countries. Obviously predictable who will actually be able to win the world business game? Open and free trade will be very beneficial to rich countries, because it has advanced production technology. The poor countries will only act as a market of the products of high mass production owned by the rich countries.

Actually, it was clear that the developed countries will be able to win the competition. They are using the advantages of mass production technology at their disposal to be able to produce more goods and better quality. Meanwhile, poor countries do not have the advanced technology, the technology is not created by poor countries, so poor countries have only a limited ability assembling level, so it would still not be able to do mass production quality as befits an industrialized country trade competitors.

The impact of trade liberalization not only affects the procedures and patterns of production, but also changing consumption patterns of society. In many countries, free trade has affected changing of consumption patterns are included in the purchase of imported products taste, even more loving import higher quality products than local products. Changing people's behavior became adherents of hedonism that is supported by the availability of consumer goods imports.

Creation of competitiveness

Economic globalization is now unavoidable, and then the state which is not competitive will be bouncing off the trade and may be experiencing economic difficulties. Then poor countries should further enhance its production capacity so as to compete with industry giants ruling the world trade.

Poor countries need to have a superior product to be sold internationally and to win the competition of international trade. Some of the activities that can be done in the short term is the availability of supply chain infrastructure such as transportation networks efficiently and effectively, and the availability of supporting infrastructure that facilitates the transaction of goods and services between buyers and sellers. The role of transportation in commerce is very prominent considering the transportation cost component must eventually be absorbed in the cost of the product itself. Globally, the transportation costs of capital or capital concerns the value of transportation (truck, rail, etc) and operational costs of transportation itself (maintenance, fuel, etc).

There are things need to be considered in the optimization of transportation facilities, among others, the availability of an integrated facility that allows the movement of goods to have more than one choice of transport (air sea

land train). Provision of fiscal incentives may be lowering the cost of transportation. In poor countries, the means of transport are still largely imported, only assembled locally, the capital required to provide transportation generally higher than countries that are able to produce their own means of transportation. Therefore, governments of poor countries should provide facilities that can reduce the cost of transportation. Transportation schedule is another aspect to be considered. In this case is not only the frequency, but also time. For example, if the production of a plantation ready to be delivered every day at 09:00 am, but there are only a train schedule at 16:00 pm every time then there is a pause (idle time) directly reduces the value of quality products, and indirectly increase the cost of the product. Security is another aspect that has a direct impact on the increase in the cost of transportation. Security in this case concerning the safety of the goods is shipped and also the security of having the goods arrives safely. One thing that needs special attention is the need for safety standards refers to the international standard. Another aspect to consider is the means of transportation may not cause higher operating costs of transportation. For example, if the lot is damaged so that maintenance and operational costs to be expensive vehicle that will directly affect the cost of transport per kilometer.

Standardization and certification, standardization and certification are very important to reduce the gap in the interpretation and representation of the quality of goods and services traded. Generally, the buyer is who sets the standard and the seller must meet the standards required in order to obtain merchandise at fair value (fair value). Standards here are physical goods, packaging, or other forms of non-physical. In addition to the standard implementation, competitiveness can also be created through the certification. In this case, the certification extends the reach and the realization of the application of the standard itself.

Information infrastructure and capital, one of the factors causing the trade transaction is trust between transacting parties. One important requirement for the provision of information is in the form of availability of information exchange.

Regulations and policies, actually the increase of trade competitiveness is in the hands of the government and the regulator, in the form of regulations and policies that support and encourage trade. Taxation policy could be given by the government to reduce the cost of production. Given the need for standardization and certification so it's good the government giving tax reduction facility for the actions that lead to improved quality, standardization, and certification. Also need to be considered to provide a tax holiday to the companies in order to lower the cost of production. Provide accelerated depreciation on the cost of technology transfer for acquired technology can be proven as a motor to increase the competitiveness of the product. There should be existing policies that support electronic transactions whether for creating virtual trading sites similar E-Bay, Pay-Pal, Alibaba and to provide assurance to users of the site. Set sectoral priorities, both for the short-term, medium-, and long-term road-map according to the trade. In this case, the goal is to make rules and regulations to be in front of problems to anticipate market needs as identified in the road map. Financial sector policies are needed to encourage trade financing as discussed above in the third pillar.

Best practice and the development of trade capacity, in improving trade competitiveness, the foundation is the willingness of producers of goods or services to adopt best practice and consistently trade capacity building. The producers and traders must be willing and ready to change the patterns of thinking and work in making the product and launch a process of trade, such as the use of technology in the transaction, investing trading advice, and most of all realize that the human factor plays an important role in trade and increased trade competitiveness can not be achieved without an increase in the ability of the protagonists involved in world trade.

Conclusion

So really there is no single country may be forced to impose trade liberalism, because when they run a trade deficit, then there is a tendency of the country also do the natural thing and began to impose trade restrictive tariff or the like, regardless the rich or the poor countries.

This has evolved during the wrong opinion that international trade will be difficult for the poor countries.

Poor countries assume if trade with developed countries will incur economic losses from not being able to compete and assume developed countries to reduce their living standards. There are also concerns that the developed countries will be flooded by products from developing countries with low price and low quality products.

Maybe this will give unfavorable impact for some groups of people in the country, because international trade will give a great influence in the distribution of income.

Suggestions

In this era of globalization, developing countries can impose policies such as the national economy improving prioritization superior sector, increase productivity, strengthen the competitiveness of the domestic market, and develop technology to increase competitiveness and income of the country concerned.

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