Trade barriers

Also known as: Trade barriers

Trade barriers (also known as trade barriers) are all measures that are intended to inhibit and restrict the exchange of goods and services. Such measures are used, for example, between states for political or economic reasons.

Definition / explanation

Trade barriers, which are often referred to as trade barriers, are those measures that hinder or inhibit the exchange of services or goods. These measures are mainly used when there is trade between two different countries.

The aim is to put foreign providers at a disadvantage in their own domestic market so that they do not take over the market and their own goods and services take a back seat. These measures are therefore considered to be strategic trade policy and are divided into tariff and non-tariff barriers to trade.

Tariff barriers to trade

Tariff barriers to trade are only possible in limited numbers. These include, for example, the import duties or export duties that can be levied. In addition, export subsidies can act as barriers to trade.

The tariffs are always based on the type of goods whose imports are to be limited. This is known, among other things, from entering the airport, where customs generally have to be paid on certain products. For other goods, on the other hand, there is initially a certain amount of allowance. Customs duties are only due if this is exceeded.

Non-tariff barriers to trade

The non-tariff barriers to trade are always measures that have nothing to do with tariffs. Rather, it is trade policy measures that are intended to hinder imports. Exports by domestic companies should also be made more difficult.

Non-tariff barriers to trade include:

  • Export bans
  • Import taxes
  • technical / legal regulations
  • Quality standards
  • Indications of origin
  • Packaging and labeling regulations

So all those things that make importing the goods and services as difficult as possible.

The aim should always be to keep foreign companies away from their own market as much as possible. However, only if the country itself can supply the services and goods in sufficient quantities.

Protectionism and its Effects

However, it is not always the case that the removal of trade barriers is actually effective.

This can result in both trade-creating and trade-diverting effects. While the trade-creating effects have a positive effect on the international market and the internal market can be strengthened within a customs union, the opposite is true for the trade-diverting effects. They ensure that trade with third countries is made even more difficult.

example - The EU is a good example of this. Many states have come together in it and trade-creating effects have emerged from it. The EU has its own laws that make trading much easier. However, if something is to be obtained from third countries, the relief does not apply - trade in this direction has become more difficult.

Summary

  • Trade barriers are intended to make trade between two countries more difficult so that one's own market is not negatively influenced by foreign companies
  • this has both advantages and disadvantages
  • There are trade-creating effects within the EU which, however, make trade with third countries more difficult
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