Indonesia plans on requiring exports to use Indonesian vessels for the carrying of crude palm oil and coal. Russia is planning on restricting the loading of hydrocarbon cargoes at Northern Sea Route ports to Russian ships. These are both examples of protectionism, a policy that has a history reaching back to the 18th century. Here is some information to help you better understand why Protectionism gaining strength again is significant to know.

What is Protectionism?

Protectionism is the economic policy of restraining trade between states (countries) through methods such as tariffs on imported goods, limited quotas, and a variety of other government regulations.

What is it for?

Protectionism is designed to help ensure that shipping and transport companies are given the incentive in utilizing their country’s shipping equipment, such as cargo ships, planes, and containers. This would include using domestic shipping companies. It is all around to incentivize those who may want to go to the outside world to acquire shipping material or equipment to reconsider and use their home country’s resources. It also will, in so many words, punish those who continue to do this, increasing the taxes on the company for one response.

Is this a good thing?

This is the disturbing question that is currently floating around now regarding protectionism resurfacing, is this a good thing or a bad thing to start taking place again? Both sides have their logical reasoning, with protectionism wanting to ensure that the mother country is receiving most of the funds to circulate back into the economy. On the counter side, punishing those who wish to obtain the best possible financial results for their company legally seems unjust.

In the end, this is a very touchy matter that will have to be thoroughly examined and tested before it should be implemented. It will also have to be monitored if and when it is made effective as to make sure the government is not abusing the policy they implemented.