Presented by:Marvin B. MercadoTRADE BARRIER1 Agovernmentimposed restriction on thefreeinternationalexchangeofgoodsorservices.Trade barriers are measures that governments or public authorities introduce to make imported goods or services less competitive than locally produced goods and services. Not everything that prevents or restricts trade can be characterized as a trade barrier.Trade and Voluntary exchange occur when the buyers & sellers feely and willingly engage in market transaction.When a trade is voluntary and non-fraudulent, both parties benefit and are better off after the trade than they were before the trade.Trade Barrier

The barriers can take many forms, including the following:TariffsNon-tariff barriers to tradeMost trade barriers work on the same principle: the imposition of some sort ofcoston trade that raises the price of the traded products. If two or more nations repeatedly use trade barriers against each other, then atrade warresults.Economists generally agree that trade barriers are detrimental and decrease overalleconomic efficiency, this can be explained by thetheory of comparative advantage. In theory,free tradeinvolves 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 asagricultureandsteel.

Trade BarrierAtariffis a tax onimportsorexports(an international trade tariff), or a list of prices for such things asrailservice,bus routes, and electricalusage (electrical tariff, etc.)Tariffs

Non-tariff barrierstotrade(NTBs) aretrade barriersthat restrict imports, but are unlike the usual form of atariff. Some common examplesof NTB's are anti-dumping measures and countervailing duties, which, although called non-tariff barriers, have the effect of tariffsonce they are enacted.

Non- TariffsNon- Tariffs

A government-imposed trade restriction that limits the number, or in certain cases the value, of goods and services that can be imported or exported during a particular time period. Quotas are used in international trade to help regulate the volume of trade between countries. They are sometimes imposed on specific goods and services to reduce imports, thereby increasing domestic production. In theory, this helps protect domestic production by restricting foreign competition.Quotas are different than tariffs (or customs), which places a tax on imports or exports in and out of a country. Both quotas and tariffs are protective measures imposed by governments to try to control trade between countries. The U.S. Customs and Border Protection Agency, a federal law enforcement agency of the U.S. Department of Homeland Security, is in charge of regulating international trade, collecting customs and enforcing U.S. trade regulations.QuotaQuota

Anembargo(from theSpanishembargo, literallyDistrait) is the partial or complete prohibition of commerce and trade with a particular country or a group of countries. Embargoes are similar to economic sanctionsand are generally considered legal barriers to trade, not to be confused withblockades, which are often considered to be acts ofwar.An embargo will restrict all trade with a country, or aim to reduce the exchange of specific goods. For example, a strategic embargo prevents the exchange of any military goods with a country. A trade embargo will restrict anyone from exporting to the target nation. Because many nations rely on global trade, an embargo is a powerful tool for influencing a nation.EmbargoEmbargo

In recent decades, tariff and quota barriers to trade in many agricultural, food, and manufactured products have declined, enabling a range of developing countries to accelerate their economic growth through expanded exports. Yet, international trade is also governed by an increasing range and variety of product and process standards and technical regulations. Standards and technical regulations, whether for products, labor, or for the environment , are applied to mitigate against health and environmental risks, to prevent deceptive practices, and to reduce transaction costs in business by providing common reference points for notions of 'quality', 'safety', 'authenticity', 'good practice', and 'sustainability'. In practice, however, standards and technical regulations may be used strategically to enhance the competitive position of countries or individual firms.Trade Barrier StandardsTrade Barrier Standards

Asubsidyis a form of financial or in kind support extended to an economic sector (orinstitution, business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from Government, the term subsidy can relate to any type of support - for example fromNGOsor implicit subsidies. Subsidies come in various forms including: direct (cash grants, interest-free loans) and indirect (tax breaks, insurance, low-interest loans, depreciation write-offs, rent rebates). Furthermore, they can be broad or narrow, legal or illegal, ethical or unethical. The most common forms of subsidies are those to the producer or the consumer. Producer/Production subsidies ensure producers are better off by either supplying market price support, direct support, or payments to factors of production. SubsidyConsumer/Consumption subsidies commonly reduce the price of goods and services to the consumer. For example, in the US at one time it was cheaper to buy gasoline than bottled water.Whether subsidies are positive or negative is typically a normative judgment. As a form of economic intervention, subsidies are inherently contrary to the market's demands. Thus, they are commonly used by governments to promote general welfare (such as housing, tuition, and sustenance). However, they can also be used as tools of political and corporate cronyism.Subsidy

Increased National SecurityOne advantage to trade restrictions is that it can encourage economic independence---a policy known as "autarky." For example, a country that is dependent on hostile neighbors for critical natural resources might attempt to secure a stable domestic supply, so that they are not beholden to other countries for their defense. If a country isn't self-sufficient, trade embargoes can be used as a weapon against them.Promotion of Domestic JobsThe most frequently cited advantage of trade barriers is that they help to promote domestic employment by keeping companies from "offshoring," or transferring domestic jobs abroad. Overall, according to the Federal Reserve Bank of San Francisco, economists believe that offshoring does not result in a net loss of domestic jobs, but rather, that jobs lost in certain sectors are recovered in others; however, this argument is nevertheless commonly used in support of trade barriers or restrictions.

Advantages of Trade BarrierProtection of Growing IndustriesAnother advantage of trade barriers is that they can help protect the development of new industries against foreign competitors. For instance, a country that is heavily dependent on exporting crude oil, and recognizing that oil is not a renewable resource, might wish to expand into consumer electronics. Without trade restrictions, their domestic electronics industry might be crushed by competition from abroad; trade barriers can help keep the industry safe until it can compete on its own.Protection Against Other CountriesTrade barriers can also protect a country against other, predatory nations. "Dumping" occurs when one nation sells large amounts of its product in another country below cost, allowing them to starve out possible competition. For example, if a lumber-exporting country wishes to establish a monopoly in another nation, they may "dump" their exports on that country until its lumber companies can no longer afford to compete. In these cases, trade barriers in the form of import quotas or tariffs can limit the ability of another country to "dump" its industry, preserving domestic competitors against those with an unfair advantage.