COLLEGE OF TECHNOLOGY LONDON *University of Wales Lampeter*

Name Student ID UWL ID Subject Lecturer Date of Submission

: Nazeeruddin Mohammed : 099230-85 : 29002373 : Global Marketing : Lipi Begum : 29th December, 2010

Trade Barriers: Before analyzing the use of trade barriers by different countries it is important to understand the term trade barrier. Barrier is anything which stops someone or something from performing a task. A trade barrier is a restriction which is imposed on the goods that are being exchanged between the countries or two different geographical units. Generally these restrictions are imposed by the governments of the respective countries being involved. Depending on the mode, requirement and relation these trade barriers can further be classified into different categories. The report will help us in covering all the required concepts for understanding the trade barriers. A set of examples of the countries which are committed to the trading regulations are also taken which would further allow the user in better understanding the impacts of the trade barriers. Introduction Trade barriers are the obstuction of free flow of services and goods made by the government policies and measures as there is number of free supporters and promotors are exist. Due to the various trade barriers existing international trade is characterised and the main objectives which are imposing the trade barriers are given below. Protecting domestic industries or other economical sector from international competition. Protecting in opposition to clearance. Protecting native developments and research. Saving the country foreign exchange resources Balancing the financial status is more favourable. Reducing the government mobilise revenue and noticable consumption.

Why do countries trade? Bilateral trade and economic efficiency, greater production and consumption, and increased technology is a positive economic effect due to the rich good-bye as changes arising from such contributions as productive resources. The production process which normally has a input and output with the idea of international trade is exported to foreign imports. Prominently, they are more low-cost goods and services desired by consumers in the United States may be domestic production provides a more efficient production processes. International Trade on the good and

bad earnings often exported the concept of a public policy debate, with a view to see the wider economic good. Benefits of free trade in a given product will be attached to the product received, and the United States for the way they want to pay import and export. The exchange will get some more valuable to some value. The specific quantity of U.S. currency found a small quantity of imports and exports to exchange for something able to be increased. This seems to be a common trend in trading sector. As technology changes and other market forces, international trade, less efficient activity relatively more efficient activities scarce resources (capital and labor) away from the economy to create wealth by inducing a reallocation party. In this case, international trade, however, across the border in a country more efficient reallocation peloton such activity, but "creative destruction" process for making and economic benefits the overall economy can be considered tto NET, and destruction and negative effects expensive industry workers. Economic analysis of the economy almost always is in the business, ensuring that the benefits exceed the cost benefits of always difficult policy issues indicates that these employees, the ability of low-wage work only own a significant adjustment can get cost and not the wider society displaces a lot of people who cut himself while works equitably. The effect of trade barriers: The International Business is an economically prosperous, imposing barriers to such exchanges, and fully realize the economic benefits of trade to prevent the country from the need to reduce welfare. Import - protected areas on the allocation of scarce resources as on an object to the allocation of resources for industrial tariffs, quotas, non-tariff barriers can lead to non-trade protection and industry competition in terms of conservation, more efficient production business process flow to reduce the export flow of imports, up words, less production, less investment required can reduce. Obviously, the export sector activities protected by import competition, the benefits will be lost. But, more importantly, more efficient production processes of international trade and the optimal level because the imported products also lose value because you usually consume the product in the economy in this regard you can use arrays will increase be reduced Consumers can, end trade barriers between regions based on the economic costs on the transfer of emotions well, but the economy as a whole, net loss due to distortions in the economy towards the wall standing at the

efficient use of scarce resources is not. United States and other countries to reduce trade barriers in the postwar era is a big step. Among industrialized countries average tariffs close to 5 percent today after WW II has been reduced by nearly 50%. Down barriers in many developing countries, still generally high, but the industrial economy can be. $ 1,000,000 $ 100,000 cost per work remaining obstacles to effective protection, was $ 70 billion per year, however, significant economic costs, 21 of the expected U.S. economic costs of 1994 existing barriers to high-security division of the $ 170,000 average transaction. With the introduction of trade barriers to products of the above categories are applicable to freedom of movement is limited. These restrictions are usually exported or imported, and even sometimes the two products will be charged. Different types of trade barriers as described above are using. Tariff Barriers Duties, quotas and taxes fall under the category of tariff barriers. Increase in the amount of tax imposed on imported goods also comes under this category. Non tariff barriers In this barrier a limit of number of goods being imported is set for certain period of time. Number of foreign goods imported is reduced or limited. This barrier helps the country in building the demand for the local goods. Voluntary constraints This kind of barrier is generally imposed by the countries to reduce or stop the goods that are regularly coming into the country. All the above specified barriers help the countries in protecting the infant industries; increase the demand for the local companies and etc.

Trade barriers Vs Free trade: impacts Advantages Free trade develops a kind of trust between two or more nations due to which free movement of people is possible. Free exchange of goods is also possible due to which economy of scale is brought down which is an advantage for trading. The barriers or borders can be moved by shrinking some nations into a union and the work division is also possible. Disadvantages Exchange of goods without any kind of benefits to the government of the nations. Industries which are weak in the market will not be able to compete with the giants. Local economic crisis strike the whole world. Off shoring

Examples for trade barriers of South Africa: South Africa is considered as a middle income country because it has divorce industrial sector and has GDP per capital of $3000. There is great between production and export pattern in south America as the export pattern has very narrow. Mineral commodities contribute a lot to the export of South Africa on one hand and on the other hand South Africa export wide range of domestic products. Gold was considered as a foreign earner but it has declined in recent year and other commodities are gaining momentum. During 1988 gold contribution was 39.7% but during 1995 it went down to 19 %. 25 % contribution is made by manufacturing and agriculture accounts for only 10% minerals sectors play an important role in the South African economy As it is main source of foreign exchange and text revenue. Mining effect environment very badly with pollution. Mineral sector contribution in South Africa export is 40% of total export in the country. Other sectors of the country have their own impact on the environment. Example of India Trade Barriers: If we look at Indias economic growth it has grown enormously over the last decade as compared to the other developed countries. GDP growth rate of the India was annually noted as 6 % on an average over the last five years where it was being low in year 1997 -1988 during the economic

crisis in Asia and price fluctuation in petroleum sector. But in after the crisis Indian economy has grown in subsequent two years, which is the result of the trade liberalization and structural reformation of financial strengths. By looking at the economic competitions amongst developed countries and threats to economic growth India has decided to grow at the rate of the 7 to 9% as compared to earlier rate of 5.4 during the year 2001 -02. In order to achieve the targeted growth rate Indian government has focus on the relationship between the economic growth & Trade. They have come across the several changes in the trade policy, removed the imports restriction, cut down the tariff and reduction in the export restriction. This action of the government helps to overcome the export bias and import issues. By considering export promotions benefits and its valuable importance government has decides to augment the export measures and vow to further reduce the restrictions on import and export. This policy also helps in generating new special economic zones and attract the new business mans mans to put their money into the market and increase export to overseas as well as vaccinate exporters from upsetting economy . The Indian government has planned to increase export to 12% so that they can contribute their share to world trade from 0.67 to almost 1% by the end of year 2007. Trade policies of the India are framed by the ministry of commerce and industry with the help of other regulatory bodies of ministries. In addition, suggestion also seeks from top bodies of government such as prime ministers and apparently self directed riff commission. Recently India has sign to strengthen the relation with the SAARC (South Asian Association for Regional Cooperation) and Bangkok. Under SAPATA (South Asian Preferential Trade Agreement) negotiation has been done with the other sarrc members on their individual trade policies. Further India has done their two sided agreement with their neighbors like Bangladesh & Nepal as well as they have agreed upon the free trade with the Sri Lanka in year 2000. New FDI (foreign direct investment) policy of India has been liberalize in their new agenda, in which they have simplify the procedure for automatic investments , helping in reserve bank registration, and allowed high investment in major sectors excluding some sensitive sectors for foreign investment. After 1990 reformation of the trade policy have been made to help the Indian economy and reduce the poverty. In this perspectives India has reduced their trade barriers and taken out the restrictions on import for balance of payment reasons. This resulted in framing of custom tariff for protection from overseas. India has made several attempts to cut down the tariffs and tried to simplify the structure but due to the unexpected nature of their end use it becomes more complex. To compete with economies of other countries and improve their efficiency India has more determined to reform their internal structure. for security and , safety and their strategic reasons , its mandatory to have licensing for trading. To tackle with the increase in competition worldwide, new trading policies has reduced the direct involvement and interference of the government in economic activities. In addition, to improve the corporate governance new bill

has been passed for e.g. according to new MRTP(Monopolies and Restrictive Trade Practices) act , they have more strict toward the governing positions and new procedure has been derived to trade with merger & acquisition .New tax structure has been reformed to restrain monetary deficit, which will help to earn revenue to improve the economy, apart from this they have also change their laws on intellectual property to facilitate the normal public and educate them. Whereas in agricultural sector, tariff of certain products have been increased which is channeled by the domestic supply. To support this policy government has come up with the Agriculture export processing zone in order to increase the export in agriculture sectors. In agricultural sector government also provide subsidiaries on certain produces through the PDS (public distribution system) exclusively for the low income farmers in order to encourage them for more production. As per above trade policies of India mentioned above, they have made corrective changes in subsidies, release in tariff barriers , increase in tax, reduction in import export restriction . This new policy has benefited to economic growth to great extent and helps India to compete in todays competitive world.

Conclusion: As we approach the economic analysis of technical barriers to trade, a series of questions arises. The most fundamental refers to the nature of the barrier. Is it related to the plant and animal health, food safety, or conservation? The answer will give a first indication of the relevant economic model used for analysis, although since many regulations have multiple objectives, the appropriate model may combine elements of those described above, it is useful toto consider market structure in which the goods are sold. Is the importer or the exporter has no market power? The market is characterized by competition or the dominant players could affect the world price through their action? This requires some indication of the nature of the global market for the product in question, to impute the effects of terms of trade regulation under consideration.

References: Theo S. Eicher, Christian Henn, Chris Papageorgiou. (2010) Trade creation and diversion revisited: accounting for model uncertainty and natural trading partner effects. Journal of Applied Econometrics Online publication date: 1-Jan-2010. Daniel Yuichi Kono. (2009) Market Structure, Electoral Institutions, and Trade Policy. International Studies Quarterly 53:4, 885-906 Online publication date: 1-Dec-2009. Hiau Looi Kee, Alessandro Nicita, Marcelo Olarreaga. (2009) Estimating Trade Restrictiveness Indices*. The Economic Journal 119:534, 172-199 Online publication date: 1-Jan-2009. Goldar, B.N., A.V.L.Narayana and S.N.Hasheem (1992), Structure of Nominal Tariff Rates in India , Studies in Industrial Development, Office of the Economic Advisor, Ministry of Industry, Government of India. Goldar,B.N. and S.N.Hasheem (1992), Indias Tariff Structure: Effective Rates of Protection of Indian Industries, Studies in Industrial Development, Office of the Economic Advisor, Ministry of Industry, Government of India.

Available at http://www.wto.org/english/tratop_e/tpr_e/tp195_e.htm (accessed on 26 dec, 2010)