PROTECTION STRATEGIES FOR AUSTRALIA

The Industries Assistance Commission and the Green Paper on Rural Policy support different protection strategies. Both strategies allow the achievement of a pattern of protection consistent with Pareto-efficiency. The Green Paper on Manufacturing proposed an approach to tariffs that would perpetuate inefficient resource allocation. The argument of the lAC and the Green Papers on protection policy is examined. A programme of across the board reductions in protection leading to free trade, modified for terms of trade effects, is suggested. It is also argued that initial increases in assistance for low cost industries are not inconsistent with such a programme.