The National Security Argument for Protection of Domestic Industries

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Abstract

Tracing the origin of the national security argument for protection of domestic industries to Adam Smith, Alexander Hamilton, and Friedrich List, we study its post-GATT applications with reference to Article XXI of the WTO. We compare the use of tariff, production/input subsidy, and government procurement as alternative instruments of protection from the perspective of economic efficiency and study the disapproval of inward FDI to gain insights into the underlying national security concerns. The case studies of a) the US tariffs on aluminum and steel, b) German disapproval of the acquisition of a technology firm Leifeld Metal Spinning by a Chinese firm, and c) US’ all out global effort to cripple China’s telecom equipment giant Huawei are presented for illustration.
Original languageEnglish
Publication statusPublished - Jul 2019

Publication series

NamePSEI Working Paper Series
PublisherPan Sutong Shanghai-Hong Kong Economic Policy Research Institute
No.1

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national security
firm
GATT
industry
economic efficiency
WTO
subsidy
China

Cite this

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The National Security Argument for Protection of Domestic Industries. / CHENG, Kwok Hon Leonard; WHITTEN, Gregory William; HUA, Jingbo.

2019. (PSEI Working Paper Series; No. 1).

Research output: Working paperWorking paper seriesWorking Paper

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