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Trade barrier
 
 
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A trade barrier is a general term that describes any government policy or regulation that restricts international trade
International trade

International trade is exchange of Capital , goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product ....
. The barriers can take many forms, including the following terms that include many restrictions in international trade within multiple countries that import and export any items of trade.

Most trade barriers work on the same principle: the imposition of some sort of cost
Cost

In economics, business, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore....
 on trade that raises the price of the traded products
Product (business)

The noun product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce from the Latin produce, lead or bring forth....
.






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A trade barrier is a general term that describes any government policy or regulation that restricts international trade
International trade

International trade is exchange of Capital , goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product ....
. The barriers can take many forms, including the following terms that include many restrictions in international trade within multiple countries that import and export any items of trade.
  • Import duty
  • Import license
    Import license

    An import license is a document issued by a national government authorizing the importation of certain goods into its territory. Import licenses are considered to be non-tariff barriers to trade when used as a way to discriminate against another country's goods in order to protect a domestic industry from foreign competition....
    s
  • Export licenses
  • Import quota
    Import quota

    An import quota is a type of protectionism trade restriction that sets a physical limit on the quantity of a good that can be imported into a country in a given period of time....
    s
  • Tariff
    Tariff

    A tariff is a tax imposed on goods when they are moved across a political boundary. They are usually associated with protectionism, the economic policy of restraining trade between nations....
    s
  • Subsidies
  • Non-tariff barriers to trade
    Non-tariff barriers to trade

    Non-tariff barriers to trade are trade barriers that restrict imports but are not in the usual form of a tariff.In some forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization , the European Union , or North American Free Trade Agreement that restrict the use of tariffs....
  • Voluntary Export Restraints
    Voluntary Export Restraints

    A "voluntary" export restraint or "voluntary" export restriction is a government imposed limit on the quantity of goods that can be exported out of a country during a specified period of time....
  • Local Content Requirements
  • Embargo
    Embargo

    In international commerce and International relations, an embargo is the prohibition of commerce and trade with a certain country, in order to isolate it and to put its government into a difficult internal situation, given that the effects of the embargo are often able to make its economy suffer from the initiative....


Most trade barriers work on the same principle: the imposition of some sort of cost
Cost

In economics, business, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore....
 on trade that raises the price of the traded products
Product (business)

The noun product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce from the Latin produce, lead or bring forth....
. If two or more nations repeatedly use trade barriers against each other, then a trade war
Trade war

A trade war refers to two or more nations raising or creating tariffs or other trade barriers on each other in retaliation for other trade barriers....
 results.

Economists generally agree that trade barriers are detrimental and decrease overall economic efficiency
Efficiency (economics)

Economic efficiency is used to refer to a number of related concepts. It is the using resources in such a way as to maximize the production of goods and services....
, this can be explained by the theory of comparative advantage
Comparative advantage

In economics, comparative advantage refers to the ability of a person or a country to produce a particular good at a lower opportunity cost than another person or country....
. In theory, free trade
Free trade

Free trade is a type of trade policy that allows traders to act and transact without coercive interference from government. Thus, the policy permits trading partners mutual gains from trade, with goods and services produced according to the law of comparative advantage....
 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
Agriculture

Agriculture refers to the production of food and goods through farming and forestry. Agriculture was the key development that led to the rise of civilization, with the animal husbandry of domestication animals and plants creating food surpluses that enabled the development of more Population density and Social stratification societies....
 and steel
Steel

Steel is an alloy consisting mostly of iron, with a carbon content between 0.2% and 2.14% by weight , depending on grade. Carbon is the most cost-effective alloying material for iron, but various other alloying elements are used such as manganese, chromium, vanadium, and tungsten....
.

Examples of free trade areas


  • North American Free Trade Agreement
    North American Free Trade Agreement

    The North American Free Trade Agreement is a trilateral trade bloc in North America created by the governments of the United States, Canada, and Mexico....
     (NAFTA)
  • South Asia Free Trade Agreement(SAFTA)
  • European Free Trade Association
    European Free Trade Association

    The European Free Trade Association was established on 3 May 1960 as a trade bloc-alternative for European states who were either unable to, or chose not to, join the then-European Economic Community ....
  • European Union
    European Union

    The European Union is an economic and political union of 27 European Union member state, located primarily in Europe. It was established by the Treaty of Maastricht on 1 November 1993 upon the foundations of the pre-existing European Economic Community....
     (EU)
  • Union of South American Nations
Other trade barriers include differences in culture, customs, traditions, laws, language and currency.

See also

  • Copenhagen Consensus
    Copenhagen Consensus

    Copenhagen Consensus is a project that seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics....
  • Customs union
    Customs union

    A customs union is a free trade area with a common external tariff. The participant countries set up common external trade policy, but in some cases they use different import Import quotas....
  • Agricultural policy
    Agricultural policy

    Agricultural policy describes a set of laws relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultural product markets....