NAME : CHIRAG BHARAT JAIN

CLASS : F Y F M

ROLL NO : 17

SUBJECT : BUSINESS ENVIRONMENT

COLLEGE : MAHARASHI DAYANAND COLLEGE OF ARTS , COMMERCE ,& SCIENCE

TOPIC :

TRADE BARRIERS

INTRODUCTIONTrade barriers are a general term that describes any government policy or regulation that restricts international trade. The barriers can take many forms, including the following terms that include many restrictions in international trade within multiple countries that import and export any items of trade:Trade barriers are often criticized for the effect they have on the developing world. Because rich-country players call most of the shots and set trade policies, goods such as crops that developing countries are best at producing still face high barriers. Trade barriers such as taxes on food imports or subsidies for farmers in developed economies lead to overproduction and dumping on world markets, thus lowering prices and hurting poor-country farmers. Tariffs aldo tend to be anti-poor, with low rates for raw commodities and high rates for labor-intensive processed goods. The Commitment to Development Index measures the effect that rich country trade policies actually have on the developing world.

INTERNATIONAL TRADE

International trade is the exchange of goods and services across national borders. In most countries, it represents a significant part of GDP. While international trade has been present throughout much of history (see Silk Road, Amber Road), its economic, social, and political importance have increased in recent centuries, mainly because of Industrialization, advanced transportation, globalization, multinational corporations, and outsourcing. In fact, it is probably the increasing prevalence of international trade that is usually meant by the term "globalization".Empirical evidence for the success of trade can be seen in the contrast between countries such as South Korea, which adopted a policy of export-oriented industrialization, and India, which historically had a more closed policy (although it has begun to open its economy, as of 2005). South Korea has done much better by economic criteria than India over the past fifty years, though its success also has to do with effective state institutions.

Trade sanctions

Trade sanctions against a specific country are sometimes imposed, in order to punish that country for some action. An embargo, a severe form of externally imposed isolation, is a blockade of all trade by one country on another. For example, the United States has had an embargo against Cuba for over 40 years.

Trade barriers

Although there are usually few trade restrictions within countries, international trade is usually regulated by governmental quotas and restrictions, and often taxed by tariffs. Tariffs are usually on imports, but sometimes countries may impose export tariffs or subsidies. All of these are called trade barriers. If a government removes all trade barriers, a condition of free trade exists. A government that implements a protectionist policy establishes trade barriers.

Economic Impact of Trade Barriers

In times of flourishing international trade, imposing trade barriers prevents the nation from fully realizing the economic benefits of such globalized trade. A protectionism regime causes over-allocation of resources in the protected sector and exploitation or under-allocation of resources in free trade sectors. This usually leads the country into economic disequilibrium, which hampers growth.Import restrictions affect international trade relations, which in turn leads to a decline in exports. Thus, the protectionism regime that is employed to protect certain sectors actually tends to retard the growth of the entire economy.Free trade environments offer greater and better choices in the market, leading to enhanced consumer satisfaction. With trade barriers in place, the government curbs consumer rights to enjoy competition in the market.

Understanding Trade BarriersAlmost every trade barrier works as a tool to ensure a protectionism policy. Trade barriers aim to hike the prices of imported products in order to secure the domestic industry against fierce competition from foreign products. Some of the most common trade barriers are:Tariffs: Taxes levied on products that are traded across borders are called tariffs. However, governments impose tariffs essentially on imports and not on exports. Two most popular types of tariffs are:•Ad valorem: This tariff involves a set percentage of the price of the imported goods.•Specific: This refers to a specific amount charged by the government on import of goods.Subsidies: Subsidies work to foster export by providing financial assistance to locally-manufactured goods. Subsidies help to either sustain economic activities that face losses or reduce the net price of production.Quotas: Import quotas are the trade limits set by the government to restrict the quantity of imports during a specified period of time.Embargo: This is an extreme form of trade barrier. Embargoes prohibit import from a particular country as a part of the foreign policy. In the modern world, embargoes are imposed during wartimes or due to severe failure of diplomatic relations.

Trade barriers regulation

The Trade Barriers Regulation (TBR) gives European businesses a tool for tackling discriminatory treatment in export marketsSince 1995 the Trade Barriers Regulation (TBR) has given European businesses a tool for tackling trade barriers in export markets. Businesses can use the TBR to ask the European Commission to investigate restrictions on their sales abroad, discriminatory treatment in foreign markets, difficulty obtaining patents or licenses or any other form of unfair barrier to their export of goods or services. In the last decade dozens of companies or industries have used the TBR to tackle problems in export markets, as well as unfair foreign trade practices that cause injury within the EU internal market. TBR cases have helped improve export conditions for carmakers in Colombia, pharmaceutical products in Turkey, textiles in Brazil and in many other cases.

TRADE BARRIERS AFFECT INTERNATIONAL TRADE

Trade barriers come in many forms. Quota is one. This is when a country sets a limit to the imported products. This is done for a number of reasons. One is because the government of the importing country wants to protect its domestic manufacturers. Other barriers or limitations are added costs such as tariffs, duties, and taxes.

In this way, trade barriers can affect international trade by preventing the flow of goods from producers to consumers. Where quotas, tariffs, and duties prevent this flow, it impacts the productivity of the producers, although these will usually seek other markets without these barriers.

Without net exports, a country cannot remain a consumer of other countries' goods without incurring large debts through the imbalance of trade. It is usually economically beneficial to all parties to maximize the production of their industries, through open markets to a wide consumer bas

Trade barriers dutyTrade barriers may occur in international trade when goods have to cross political boundaries. A trade barrier is a restriction on what would otherwise be free trade. The most common form of trade barriers are tariffs, or duties (the two words are often used interchangeably in the context of international trade), which are usually imposed on imports. There is also a category of nontariff barriers, also known as nontariff measures, which also serve to restrict global trade. There are several different types of duties or tariffs. An export duty is a tax levied on goods leaving a country, while an import duty is charged on goods entering a country. A duty or tariff may be categorized according to how it is calculated. An ad valorem tariff is one that is calculated as a percentage of the value of the goods being imported or exported. For example, a 20 percent ad valorem duty means that a duty equal to 20 percent of the value of the goods in question must be paid. Duties that are calculated in other ways include a specific duty, which is based on the quantity, weight, or volume of goods, and a compound duty (also known as a mixed tariff), which is calculated as a combination of an ad valorem duty and a specific duty.

CONCULISION

Trade barriers are any of a number of government-placed restrictions on trade between nations. The most common sorts of trade barriers are things like subsidies, tariffs, quotas, duties, and embargoes. The term free trade refers to the theoretical removal of all trade barriers, allowing for completely free and unfettered trade. In practice, however, no nation fully embraces free trade, as all nations utilize some assortment of trade barriers for their own benefit.