The national security argument for protection of domestic industries

Leonard K. CHENG*, Gregory W. WHITTEN, Jingbo HUA

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)

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 and highlight some recent abuses. 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
Pages (from-to)365-388
Number of pages24
JournalJournal of Chinese Economic and Business Studies
Volume17
Issue number4
Early online date23 Feb 2020
DOIs
Publication statusPublished - Apr 2020

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Bibliographical note

The authors would like to thank Professor K.C. Fung and an anonymous referee for their valuable comment and suggestions, and the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University, for generous support.

Keywords

  • National security concerns
  • WTO’s Article XXI
  • case studies
  • instruments of protection
  • protection under Trump

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