What are barriers to trade?
Barriers to trade are regulations and measures imposed by authorities that unduly impede trade in goods or services, in export or import. Various restrictions on investments can also be counted among trade barriers. Loss of business opportunities is the most serious impact of a trade barrier, but even their minor effects may require extra time and trouble and cause additional expenses.
Trade barriers can be e.g. the following:
various standards and technical regulations
inspection, testing or certification requirements
import licensing, import quotas, import bans
customs procedures, special border documentation requirements
high customs duties and other charges
discriminatory taxation practices
violation of intellectual property rights
foreign exchange regulations, regulations on repatriation of profits
discriminatory rules of public procurement and domestic content requirements
deficient compliance with legislation in force
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.
Trade barriers are constraints that tend to hinder the motivation to engage in the importing or exporting of goods. The most common examples of a trade barrier are government imposed economic barriers such as tariffs or quotas. Depending on the type of trade barrier imposed, various... [continues]
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