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Trade barrier – what is a trade barrier
- December 5, 2013
- Posted by: admin
- Category: Uncategorized
Trade barriers are government-induced restrictions on international trade.
Restrictions that hinders certain goods from being imported into a country.
The barriers can take many forms, including the following:
Tariffs
Non-tariff barriers to trade
Import licenses
Export licenses
Import quotas
Subsidies
Voluntary Export Restraints
Local content requirements
Embargo
Currency devaluation
Trade restriction
Most trade barriers work on the same principle: the imposition of some sort of cost on trade that raises the price of the traded products.
If two or more nations repeatedly use trade barriers against each other, then a trade war results.
Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency, this can be explained by the theory of comparative advantage.
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.
Article taken From Wikipedia.