This is only good if you want to work for big government granted monopolies where you are just a cog in a big machine.
To create a culture of export and value addition, every person should have ability to import the best machine they can afford from abroad without government eating into budget through import taxes.
For example, imagine I am creating fishing line and I found that best way to go about is to import a German machine through which I will be able to create high quality fishing lines.
Government imposed 200% duty on German machinery and now my competitor who is in Singapore can easily import that machine because he isn't paying 200% import duty on importer machine.
How is my product going to be able to compete in international export market when my investment is already double of my competitor.
This is the process of niche discovery. Big companies are slow at finding new niches to exploit. Small companies can do the exploration work and if they find something which works, they can become future big companies.
And if I am not able to import German machine guess what I am going to do? I am going to import end product form someone who is able to create the end product at cheaper cost then put my label on top of it and sell locally. What did I learn? Just slap label, market and print money?
I gained no manufacturing expertise.
When you add useless import taxes, you increase import of "final product" over import of "intermediary product". This way your country can't add value and you fail to capture value from a supply chain
People I met who lived in that era didn't describe it that way to me. They were prideful of what they'd accomplished.
> Government imposed 200% duty on German machinery and now my competitor who is in Singapore can easily import that machine because he isn't paying 200% import duty on importer machine.
Best way to deal with this is to get the local industry to reverse engineer the machine and produce a copy. Intellectual property be damned. This boosts local industry, improves the local economy, allows independent innovations, reduces the nation's dependence on foreign markets, etc.
Obviously, the established players don't want this. They want developing countries to buy their stuff instead of making their own. Intellectual property is the true government-mandated monopoly.
> How is my product going to be able to compete in international export market when my investment is already double of my competitor.
The point is to focus on the needs of your people first and foreigners second. The fact is companies don't care all that much about their secondary markets. I've seen products for sale here with labels printed in spanish: they didn't even care enough to create labels for us.
The trick is to make your own people your primary market. The US does this, Japan does this. Why should other countries be any different?
> I am going to import end product form someone who is able to create the end product at cheaper cost then put my label on top of it and sell locally. What did I learn? Just slap label, market and print money?
It's a lot easier to develop an existing industry than to create one out of nowhere. Industry could start by simply assembling parts. When the industrialists see a return on their investment, they can expand the scope of their operations and perform R&D.
No thanks. I'd rather not have US laws imposed on my country via trade agreements just so it's easier for them to sell their stuff here. If they want to expand to our markets, they should have to establish a real presence here and play by our rules.
Also, import taxes don't matter much compared to currency fluctuations. I remember a time when USD 1 ≈ BRL 1.6, importing consumer goods was a relatively simple matter despite taxes. Today USD 1 = BRL 5.11 and prices have become prohibitive even without any taxes.
> Some countries like India, Brazil play extremely unfair - this only helps few industrialists in these countries but overall public suffers usually as they are forced to buy substandard goods from local providers, instead of someone internationally competitive.
I used to think that way but the truth is it was a massive gain for our industry. Computer technology was licensed from foreign companies and produced here. Only large scale computers could be imported. This is great and continues to this day: companies pay less taxes if they manufacture their products here instead of importing. Software was a similarly protected industry and that is part of the reason why Lua exists.
Japan, USA and many other countries employ protectionism to great effect but when we do it we get sanctions from the USA? Because they want "compensation" for the losses american companies suffered due to the policy? Where's our compensation for the american agricultural subsidies?
This is why so many people say trade agreements are just modern day imperialism. It's obvious who's being favored by the agreement.
> This prevents countries like India or Brazil from becoming Taiwan
Why should we want to become Taiwan? If anything we should want to be more like China: heavy industrialization, access to the intellectual property of established international players, sells directly to markets they couldn't care less about (like us), will one day be in a position to compete directly with if not undercut them, etc.