Policy Documents

Regulatory Protectionism A Hidden Threat to Free Trade

K. William Watson and Sallie James –
April 9, 2013
In this Cato Institute Policy Analysis, the authors contend that in spite of the success of trade liberalization, domestic industries try to find ways to use the power of government to protect themselves from foreign competition. Using domestic environmental or consumer safety regulation disguises protectionist policy. This regulatory protectionism harms the U.S. economy, increase prices, and violates trade obligations. Economic globalization has provided consumers with access to a wide range of imported products, thus enabling consumers to demand high-quality products at low cost. Policymakers should be skeptical of regulatory proposals backed by the target domestic industry and of proposals that lack a plausible theory of market failure. These are red flags that the proposal is the product of privilege-seeking special interests disguised as altruistic consumer advocates.