Trade policy refers to the rules and regulations that govern a country's trade. The main instruments of trade policy are tariffs, subsidies, import quotas, voluntary export restraints, local content requirements, administrative policies, and antidumping duties. Tariffs are taxes on imports or exports, subsidies are government payments to domestic producers, and quotas directly limit the quantity of goods that can be imported. The goal of these policies is typically to protect domestic industries and increase government revenues, but they can also help domestic producers gain export markets.

1. Instruments of
trade policy
GERMAN, JESSIE RAY
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2. What is trade policy?

3. is a collection of rules and regulations which pertain to trade. Every
nation has some form of trade policy in place, with public officials
formulating the policy which they think would be most appropriate
for their country.

4. Tariffs Local Content Requirements
Subsidies Administrative Policies
Import Quotas Antidumping Duties
Voluntary Export Restraints
The Seven Instrument of
Trade Policy

5. Tariff
-is a tax levied on imports or exports. They are divided in two
categories:
• 1. Specific tariffs: are levied as a fixed charge for each unit of a good
imported.
• 2. Ad valorem tariffs: are levied as a proportion of the value of the
imported good. In most cases, tariffs are placed on imports to protect
domestic producers; tariffs increases government revenues.

6. Subsidy
is a government payment to a domestic producer. They take many
forms like, cash grants, low-interest loans, tax breaks and
government equity participation in domestic firms. Subsidies help
domestic producers in two ways:
• competing against foreign imports
• gaining export markets.

7. Import Quota
Is a direct restriction on the quantity of some good that maybe imported into a country. The
restriction is usually enforced by issuing import licenses to a group of individuals or firms.
There are Two Basic Types of Quotas
Absolute quotas limit the quantity of imports to a specified level during a specified period
of time.
Tariff-rate quotas allow a specified quantity of goods to be imported at a reduced tariff rate
during the specified quota period.

8. Voluntary Export Restraint
-is a quota on trade imposed by the exporting country, typically at the request
of the importing country’s government.
Local Content Requirement
-is a requirement that some specific fraction of a good needs to be produced
domestically.

9. Administrative Trade Policies
-are bureaucratic rules designed to make it difficult for imports to enter a
country.
Antidumping Duties
-Dumping is a variously defined as selling goods in a foreign market at below
their costs of producing; dumping is viewed as a method by which firms
unload excess production in foreign markets.
-Antidumping policies are designed to punish foreign firms that engage in
dumping. Their objective is to protect domestic producers from unfair foreign
competition.

10. The Effects of Trade Policy
The effect of trade policy is tend to grow faster, innovate, improve productivity
and provide higher income and more opportunities to their people. Open trade
also benefits lower-income households by offering consumers more affordable
goods and services.