Trade policies are rules established by governments to regulate international trade. There are several types of trade policies including national policies set by individual countries, bilateral policies between two nations, and international policies set by economic organizations. Governments use various policy tools like tariffs, import quotas, and export promotions to influence trade balances and achieve economic goals. Nations can have open or closed economies depending on how freely they trade internationally.

2. • TRADE is the transfer
of ownership of goods & services
from one person or entity to
another. Trade is sometimes loosely
called commerce or financial
transaction or barter.
• A POLICY is typically described as a
principle or rule to guide decisions
and achieve rational outcome(s).

3. • Are government policies that
directly influences the quantity of
goods and services that a country
imports or exports.
• Defines standards, goals, rules and
regulations that pertain to trade
relations between countries.

4. • TARIFF – a tax on imported goods.
• IMPORT QUOTA – a limit on the
quantity of a good that can be
produced abroad and sold
domestically

5. • To achieve a balanced expansion of
trade.
• To develop overseas markets within
a framework of multilaterialism
(free, open and equitable trade
between countries)
• To boost the nation’s international
trade.

6. Trade policies can assume varying
dimensions and scope depending on the
number of parties involved in the policy.
Consider the following types of trade
policies:
• National trade policy: Every country
formulates this policy to safeguard the
best interest of its trade and citizens.
This policy is always in consonance with
the national foreign policy.

7. • Bilateral trade policy: This policy is formed
between two nations to regulate the trade and
business relations with each other. The national
trade policies of both the nations and their
negotiations under the trade agreement are
considered while formulating bilateral trade
policy.
• International trade policy: International
economic organizations, such as Organization
for Economic Co-operation and Development
(OECD), World Trade Organization (WTO) and
International Monetary Fund (IMF), define the
international trade policy under their charter.
The policies uphold the best interests of both
developed and developing nations.

8. • CLOSED Economy: An economy that does not
interact with other economies. These are the
economies who do not export much nor do
they import goods. They may also enjoy an
export surplus but do not accept as much
imports as they export.
Example : BRAZIL
• In a way, Brazil is a jail. Fortunately, it is a
beautiful prison, with glittering beaches, exotic
flowers and wonderful food. However, it has
190 million Brazilians locked in a closed
economy—forced to accept whatever quality of
goods and services, at whatever price and
quantity.

9. • Open Economy: An economy that
interact freely with other economies
around the world. They accept and
support the goods of other countries as
much as they export their own products
to other countries.

10. • Exports – goods and services that are
produced domestically and sold abroad
• Imports - goods and services that are
produced abroad and sold domestically.
• Net Exports – the value of a nation’s exports
minus the imports (also called trade balance)
NX = E - M

11. • Trade Surplus – an excess of exports over
imports
• Trade Deficit - an excess of imports over
exports
• Balanced Trade – a situation in which exports
equal imports

12. • TARRIFS - taxes on imports that have the
effect of raising the price of imports relative
to domestically produced goods
- should act to increase the market share of
domestic producers at the expense of
imports

13. • IMPORT CONTROLS- using quotas or a
system of import licensing, the government
is able to restrict the quantities of goods
imported into the country.
- these measures also guarantees a set share
of the market for domestic producers.

14. • EXPORT PROMOTION :
Incentive programs designed to attract
more firms into exporting by offering help
in product and market identification
and development, pre-shipment and post-
shipment financing, training, payment guaranty
schemes, trade fairs, trade visits,
foreign representation, etc

15. • EXCHANGE CONTROLS - Types of controls
that governments put in place to ban or
restrict the amount of foreign currency or
local currency that is allowed to be traded or
purchased. Common exchange
controls include banning the use of foreign
currency and restricting the amount of
domestic currency that can be exchanged
within the country.

16. • NOMINAL EXCHANGE RATES – the rate at
which a person can trade the currency of one
country for the currency of another.
Example : converting $ to Php
 APPRECIATION of the dollar – exchange rate
changes so that a dollar buys more foreign
currency
 DEPRECIATION of the dollar – exchange rate
changes so that a dollar sells more foreign
currency

17. • REAL EXCHANGE RATES – the rate at which a
person can trade the goods and services of
one country for the goods and services of
another.
Like the Nominal Exchange Rates, it is also
expressed as units of the foreign item per
unit of the domestic item. But in this
instance, the item is a good rather than an
currency.