INTERNATIONAL TRADE BARRIERS WORK

Economists generally believe that trade barriers decrease overall economic

efficiency. In theory, free trade expects removal of all such barriers, excepting

those considered necessary for well-being or security of a country or nation-State.

In practice, though, even countries promoting free trade heavily subsidize some

of their own industries, especially agriculture and steel. In recent years, free trade

agreements between two or more nations have become common. For instance,

North American Free Trade Agreement (NAFTA), South Asia Free Trade

Agreement (SAFTA), European Free Trade Association, European Union (EU),

Union of South American Nations.

Other variants of trade barriers result from differences in culture, customs,

traditions, laws, language and currency. Countries and nation-States do differ

from one another and do not follow common and uniform laws, procedures and

customs. According to an analyst, current debate and differences over free trade

include such barriers as:

1. Intellectual property infringement—including copyright, patent and

trademarks.

2. Customs procedures that are not uniformly applied.

3. Lack of competitive bidding for foreign government tenders.

4. The application of direct or indirect subsidies by a foreign government in favour

of domestic suppliers.

5. Burdensome certification and testing requirements that are not required by

domestic manufacturers.

6. Influence pedalling—A corporate entity or country is interfering with fair trade

practices at other’s expense.

7. Bribery, corruption and requests for payoffs—When foreign bribery prevents

you from competing fairly on the basis of price, quality or service.

Trade barriers work because they are effective in protecting a country’s own

interests; both industry and services sectors do need protection and promotion so

that they continue to make their contribution to the country’s economy and well-

being, keep workers employed and increase country’s prosperity without undue

competition from other countries. But, in global context, trade barriers or

protective measures may not be so beneficial as some economic protections are

more costly than others and can trigger a trade war.

As far as subsidies are concerned, poorer countries do not have the ability to

raise subsidies and are more vulnerable than richer countries in trade wars. By

raising protections against dumping of cheap products, it risks making the product

too expensive and beyond the means of its people.

Whether trade barriers work or are beneficial has different answers. When

viewed from an individual country’s perspective, in an unequal world it becomes

necessary to protect its interests and trade barrier is a handy protective tool for

the purpose. But from the world perspective, trade barriers only impede trade

and raise costs of goods and services. Yet, the least developed countries remain

helpless because they are not powerful enough to use trade barriers as protective

shield. They have to depend on richer and powerful countries for their growth

and well-being.

Rich nations must redress the deep inequities in the trade system and reverse the

marginalisation of poorer countries. However, World Trade Organisation’s current

con-figuration makes this impossible, and extending its work into new areas of

the global economy will only make matters worse.