Managed Trade

Managed Trade and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Managed Trade: A trade policy approach that denies the practicability of traditional “laissez-faire” approaches to trade, and instead seeks to promote the development and international competitive position of key industries. The managed-trade approach has two main elements. First, it asserts that other governments –through various forms of industrial policy –actively subsidize, protect or otherwise support certain domestic industries in carving out a share in world markets, and concludes that any country failing to follow suit will place its own firms at a disadvantage relative to their foreign rivals. Second, it envisages a series of international agreements codifying “rules of the game” for such interventions. A third element suggested by some advocates of managed trade — who argue that conventional trade agreements are ineffective in such an environment –is to set quantitative targets for imports or exports in various key industries, coupled with the use or threat of trade sanctions to enforce those outcomes. Sometimes referred to as “results-oriented trade policy,” in contrast with rules-oriented trade policy.