Trade barrier

Short description: Restrictions limiting international trade

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World trade

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Restrictions

* Trade barriers
* Tariffs
* Non-tariff barriers
* Import quotas
* Tariff-rate quotas
* Import licenses
* Customs duties
* Export subsidies
* Technical barriers
* Bribery
* Exchange rate controls
* Embargo
* Safeguards
* Countervailing duties
* Anti-dumping duties
* Voluntary export restraints

History

* Mercantilism
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Organizations

* International Monetary Fund
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* Preferential trading area
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Issues

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Lists

* Imports
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By country

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Theory

* Comparative advantage
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* Ricardian trade theories
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Trade barriers are government-induced restrictions on international trade.[1] According to the theory of comparative advantage, trade barriers are detrimental to the world economy and decrease overall economic efficiency.

Most trade barriers work on the same principle: the imposition of some sort of cost (money, time, bureaucracy, quota) on trade that raises the price or availability of the traded products. If two or more nations repeatedly use trade barriers against each other, then a trade war results. Barriers take the form of tariffs (which impose a financial burden on imports) and non-tariff barriers to trade (which uses other overt and covert means to restrict imports and occasionally exports). In theory, free trade involves the removal of all such barriers, except perhaps those considered necessary for health or national security. In practice, however, even those countries promoting free trade heavily subsidize certain industries, such as agriculture and steel.

## Contents

* 1 Overview
* 2 Impacts of trade barriers on business
* 3 See also
* 4 References
* 5 External links
* 5.1 Databases on Trade Barriers

## Overview

High-income countries tend to have less trade barriers than middle income countries which, in turn, tend to have less trade barriers than low income countries.[2] Small states tend to have lower trade barriers than large states.[3][4][5] The most common trade barriers are on agricultural goods.[2] Textiles, apparel and footwear are the manufactured goods which are most commonly protected by trade barriers.[2] Tariffs have been declining in the last twenty years as the influence of the World Trade Organization has grown, but states have increased their use of non-tariff barriers.[2]

According to Chad Bown and Meredith Crowley, world trade is "probably" vastly more liberal in current times than was the case historically.[2] According to Ronald Findlay and Kevin H. O’Rourke, "for the nineteenth and twentieth centuries trade barriers and transport costs were the most important barriers to trade".[6] They also write, "during the mercantilist era price gaps were as likely to be due to trade monopolies, pirates, and wars as to transport costs and tariffs, which are more easily quantifiable."[6]

Georgetown University Professor Marc L. Busch and McGill University Professor Krzysztof J. Pelc note that modern trade deals are long and complex because they often tackle non-tariff barriers to trade, such as different standards and regulations, in addition to tariffs. Due to steadily decreasing tariff barriers since World War II, countries have become increasingly likely to enact trade barriers in forms other than tariffs. National firms often lobby their own governments to enact regulations that are designed to keep out foreign firms, and modern trade deals are one way to do away with such regulations.[7]

The barriers can take many forms, including the following:

* Tariffs
* Non-tariff barriers to trade include:
* Import licenses
* Export control / licenses
* Import quotas
* Subsidies
* Voluntary Export Restraints
* Local content requirements
* Embargo
* Currency devaluation[8]
* Trade restriction

## Impacts of trade barriers on business

Trade barriers are often criticized for the effect they have on the developing world. Because rich-countries are able to set trade policies, goods, such as crops that developing countries are best at producing, still face high barriers. Trade barriers such as tariffs on food imports or subsidies for farmers in developed economies lead to overproduction and dumping on world markets, thus lowering world prices to the disadvantage of farmers in developing economies who typically do not benefit from such subsidies. The Commitment to Development Index measures the effect that rich country trade policies actually have on the developing world.

Trade barriers are mostly a combination of conformity and per-shipment requirements requested abroad, and weak inspection or certification procedures at home. The impact of trade barriers on companies and countries is highly uneven. One particular study showed that small firms are most affected (over 50%).[9]

Another negative aspect of trade barriers is that they result in a limited choice of products and would therefore force customers to pay higher prices and accept inferior quality.[opinion][10]

Trade barriers obstruct free trade. Before exporting or importing to other countries, firstly, they must be aware of restrictions that the government imposes on the trade. Subsequently, they need to make sure that they are not violating the restrictions by checking related regulations on tax or duty, and finally they probably need a license in order to ensure a smooth export or import business and reduce the risk of penalty or violation. Sometimes the situation becomes even more complicated with the changing of policy and restrictions of a country. [vague][11]

## See also

* Agricultural policy
* Customs union
* Denied trade screening
* Free economic zone (includes Free Port).
* Free trade
* Free-trade area - a region encompassing a trade bloc whose member countries have signed a free trade agreement. Such agreements involve cooperation between at least two countries to reduce trade barriers, import quotas and tariffs, and to increase trade of goods and services with each other.
* North American Free Trade Agreement (NAFTA)
* South Asia Free Trade Agreement (SAFTA)
* European Free Trade Association
* European Single Market
* Union of South American Nations
* New West Partnership (An internal free-trade zone in Canada between Alberta, British Columbia, and Saskatchewan)
* Gulf Cooperation Council common market
* Regional lockout

## References

1. ↑ "What is trade barrier? definition and meaning". http://www.businessdictionary.com/definition/trade-barrier.html.
2. ↑ 2.0 2.1 2.2 2.3 2.4 Bown, C. P.; Crowley, M. A. (2016-01-01). Staiger, Kyle Bagwell and Robert W.. ed. Handbook of Commercial Policy. 1, Part A. North-Holland. pp. 3–108.
3. ↑ Easterly, William; Kraay, Aart (2000-11-01). "Small States, Small Problems? Income, Growth, and Volatility in Small States". World Development 28 (11): 2013–27. doi:10.1016/S0305-750X(00)00068-1.
4. ↑ Rodrik, Dani (1998-10-01). "Why Do More Open Economies Have Bigger Governments?". Journal of Political Economy 106 (5): 997–1032. doi:10.1086/250038. ISSN 0022-3808. http://www.nber.org/papers/w5537.pdf.
5. ↑ "The Size of Nations" (in en-US). https://mitpress.mit.edu/books/size-nations.
6. ↑ 6.0 6.1 "Commodity Market Integration, 1500–2000". https://www.nber.org/chapters/c9585.pdf.
7. ↑ "Yes, the TPP agreement is over 5,000 pages long. Here's why that's a good thing". Washington Post. https://www.washingtonpost.com/news/monkey-cage/wp/2016/08/02/yes-the-tpp-agreement-is-over-5000-pages-long-heres-why-thats-a-good-thing/.
8. ↑ The Wall Street Journal of Europe, October. 11, 2011 p. 6
9. ↑ The Invisible Barriers to Traded. Geneva, Switzerland: International Trade Center. 2015. http://www.intracen.org/publication/The-Invisible-Barriers-to-Trade
How-Businesses-Experience-Non-Tariff-Measures/.
10. ↑ Mühlbacher, Hans; Leihs, Helmuth; Dahringer, Lee (1999). International Marketing: A Global Perspective. p. 7. ISBN 9781844801329.
11. ↑ Demetrios Marantis (2013). ﻿National Trade Estimate Report on Foreign Trade Barriers﻿ (Report). p. 132. https://ustr.gov/sites/default/files/2013 NTE.pdf. Retrieved 29 April 2021.

## External links

### Databases on Trade Barriers

* ITC's Market Access Map, an online database of customs tariffs and market requirements
* ITC's Non-Tariff Measures Business Survey database, including regulatory and procedural obstacles that trading companies face both at home and abroad

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International trade

Terminology|

* Absolute advantage
* Balance of payments
* Balance of trade
* Capital account
* Comparative advantage
* Current account
* Export-oriented industrialization
* Fair trade
* Foreign exchange reserves
* Globalization
* Import substitution industrialization
* Net capital outflow
* Outsourcing
* Tariff
* Trade justice
* Trade war
* Trading nation

Organizations
and policies

* International Monetary Fund
* UN Conference on Trade and Development
* World Bank Group
* World Trade Organization
* International Trade Centre
* International Chamber of Commerce
* Bilateral investment treaty
* Economic integration
* Incoterms
* ATA Carnet
* Free-trade zone
* Special economic zone
* Trade agreement
* Trade barrier
* Trade bloc

Political economy|

* Free trade (Adam Smith, The Wealth of Nations, Repeal of the Corn Laws)
* Mercantilism
* Protectionism (Economic nationalism, Autarky)

Regional organizations|

| Americas|

* Andean Community of Nations
* Caribbean Community
* Central American Integration System
* Mercosur

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Asia-Pacific|

* Association of Southeast Asian Nations
* Regional Comprehensive Economic Partnership
* South Asian Association for Regional Cooperation

Europe, Central Asia, and North Asia|

* Customs Union of Belarus, Kazakhstan, and Russia
* Eurasian Economic Union
* European Union Customs Union

Middle East and North Africa|

* Arab Customs Union
* Cooperation Council for the Arab States of the Gulf

Subsaharan Africa|

* East African Community
* Economic and Monetary Community of Central Africa
* Southern African Customs Union
* West African Economic and Monetary Union

Exports by product|

* Aircraft & Spacecraft
* Aircraft parts
* Aluminium
* Cars
* Car parts
* Coal
* Coffee
* Computers
* Copper
* Corn
* Cotton
* Diamonds
* Electricity
* Engines
* Gas turbines
* Gold
* Integrated circuits
* Iron ore
* Natural gas
* Oil
* Petrol
* Pharmaceuticals
* Ships
* Steel
* Telecommunications equipment
* Telephones
* Trucks
* Wheat
* Wine

* Category
* Commons

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