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Reasons for protectionism

Study Reasons for protectionism in the Pearson Edexcel A Level Business specification, with the knowledge and exam application needed for accurate mark-scheme responses.

Syllabus
First assessment 2019
Course
Business XBS11/YBS11
Level
A2

Exam points

  • Apply Reasons for protectionism accurately, using relevant evidence and clear links to the question context.

4.3.1.4a - Reasons for protectionism question 1

[Maximum number: 8]

Sources for use with Extract A Chinese tariffs force Alaska seafood industry to look beyond China The Alaska Seafood Marketing Institute is looking for ways to expand the Alaska seafood brand in response to a 25% tariff on Alaskan seafood imposed by China in summer 2018. China buys $1bn of Alaskan fish annually, making it Alaska’s top seafood export market. The Institute’s director says Alaska’s seafood sales are down by more than 20% so far in 2019 in response to the price increase caused by the tariff. He says the three-year federal Agricultural Trade Promotion grant of $5.5m awarded in January will be used to develop new markets such as Japan, Southeast Asia and parts of South America. The Institute will continue to work in China and other established markets such as Germany. 5

3 Extract B The impact of Alaska’s seafood industry on the American economy • The Alaskan seafood industry creates an estimated 99,000 jobs, $5.2bn in annual labour income and $12.8bn in economic output. • Alaska exports more than one million metric tonnes of seafood each year, bringing over $2.5bn into the US economy. • The industry catches and processes enough seafood each year to feed everybody in the world at least one serving of Alaskan seafood, or one serving for every American for more than a month (12.9 billion servings in 2015). • Alaskan seafood was sold in 105 countries around the world in 2016. Export markets typically account for approximately 67% of sales value, while the US market buys the remaining 33%. • Seafood directly employs more workers than any other industry in Alaska. 1,323 812 707 669 182 China Japan Canada Korea Germany Alaska’s Top 5 Export Markets (Millions of U.S. Dollars) Alaska’s Top 5 Export Categories (Millions of U.S. Dollars) Fish & Other Marine Products Minerals & Ores Petroleum & Coal Products Transportation Equipment Oil & Gas 2,533 1,795 180 94 86 5 10

4 Extract C Alaska Weaknesses: Challenges to economic development Geography and distance: Alaska’s remoteness, its huge size, limited infrastructure, extreme weather, and varied landscape present challenges to economic development. This increases the cost of finished goods and exports. Development obstacles: The cost of doing business in the state, complex logistics, and state land ownership present enormous barriers to the development of mining, oil, gas and timber. Infrastructure limitations: Of Alaska’s 29 regions, 17 lack a highway connection to the rest of the continent. Broadband access is severely limited (or nonexistent) in many rural areas. There are few ports and harbours in Western and Arctic Alaska in particular, which limits the flow of goods and increases costs. Strengths: Assets to support economic development Established industry sectors: Oil, gas, mining, seafood, and tourism, are all creating economic growth. Emerging industry sectors: Outside of the state’s established industries there are a number of other sectors with high growth potential in Alaska. These include maritime industries, renewable energy, aviation, agriculture and healthcare. Natural resource endowment: Alaska has plentiful natural resources, including oil, gas and minerals. It also has timber and an abundance of seafood.

Discuss the benefits for China of imposing tariffs.

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