2. Trade Instruments Every Govt. use different trade instruments to seek the range of outcomes of imports & exports and also to achieve the desired goals. The trade control instruments can be distinguished as 1. Indirectly affect the amount traded by directly influencing the price on import & exports/ Tariffs. 2. Those that directly limit the amount of goods (quantity)that can be traded/ Non-Tariffs.
3. TARIFFS/DUTY While shipping goods internationally, the government directly charges a duty on a goods for crossing its national boundary for protection and revenue on a per unit or a value system is known as tariffs. Tariffs collected by the exporting country are called Export Tariffs. Levied by a country through which the goods have passed called Transit Tariffs. Collected by the importing countries are called import Tariffs.
4. NON-TARIFF BARRIERS Tariff raise prices & limit trade sometime the govt. alter the prices of products to limit their product import or export. (Direct Price Influence)-Subsidies help companies be competitive when to overcome the market imperfections are least controversial. Aid and loans to other countries & the recipient is required to spend the fund in the donor country known as tied aids and tied loans. (Quantity Controls)-Quota means setting the total amount to be traded or allocate amount by its country.
5. Contd.. Voluntary Export Restraint (VER)-when a voluntary choice by a particular country to constrain its shipment to another country to protect the political relations. Embargoes-A specific type of quota that prohibits all forms of trade (fixed the limit at zero) regardless of origin or destinations. Buy local legislation-Govt. give preference to domestically made goods or specify a domestic content restrictions. Standard & labels- Arbitrary Standard, Licensing arrangements, Administrative delays, Reciprocal requirement, service restrictions.
6. Revised cases: Domestic industries & consumer suffer (job/industry) Promotion of inefficiencies, (Infant Industry argument), Creating hardship/poverty in a nation (debatable), Could provoke retaliation & trade war. Solution does not lie in retaliatory action but in establishment of Rules & Regulations for International Trade which results MINIMAL TRADE DISTORTING activities.
7. CONCLUSION Governmental interference is often argued to be beneficial if it promotes industrialization. Different trade control instruments are used to improve the economic relations with other countries. A country’s development of an International strategy greatly depend on trade controls that directly affect price and indirectly affect quantity(tariffs, subsidies, arbitrary customs-valuation methods & special fees) and directly affect quantity and indirectly affect price(quotas, VER, buy local, arbitrary standards, licensing arrangements, foreign exchange controls & administrative delays)
