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Presented by Renjith.R (FK-2113) Rajesh.R (FN-150)

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 (GDP).

International trades economic, social, and political importance has been on the rise in recent centuries mainly because of Industrialization, advanced transportation, Globalization, Multinational corporations, and outsourcing.

Trade Barriers
Govt Policies and measures which obstruct the free flow of goods and services across national borders. The main objectives of imposing trade barriers are: Protect domestic industries Guard against dumping Promote indigenous research and development Conserve foreign exchange resources of the country BOP position more favorable Curb consumption and mobilize revenue for govt

Classification of Trade Barriers 1. Tariff barriers 2. Non tariff barriers

Tariff barriers
Tariffs in international trade refers to the duties or taxes imposed on internationally traded products when they cross the national borders. Because of this barrier, imports decrease and price of imported products increase which results in the fall in the demand giving boost to domestic products.
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Classification of Tariffs
o Exports tariffs- Levied by the country of origin on exported products. o Transit tariffs- Levied by a country through which goods pass en route to their final destination. o Import tariffs- Levied by the country of destination on imported products. o Ad valorem tariff - Assessed as a percentage of the value of
an item. If both a specific duty and an ad valorem tariff are assessed on the same product, it is known as a compound duty.
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Revenue tariff- A set of rates designed primarily to raise money for the government. A tariff on coffee imports imposed by countries where coffee cannot be grown, for example raises a steady flow of revenue. Protective tariff- Intended to artificially inflate prices of imports and protect domestic industries from foreign competition. Specific tariff- A tariff of a specific amount of money that does not vary with the price of the good. These tariffs are vulnerable to changes in the market or inflation unless updated periodically.
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Nontariff Barriers(NTB)
Non-tariff barriers to trade (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff. NTB fall under two category: First category include those tariffs which are generally used by developing countries to prevent foreign exchange out flows. Second category include those which are mostly used by developed economies to protect domestic industries

Forms of NTB o Voluntary Export Restraints (VERs) VERs are bilateral arrangements instituted to restrain the rapid growth of exports of specific manufactured goods. The VERs are usually highly discriminatory. o Administered barrier, Technical & Other Regulations o .Government Procurement: Laws that direct a Government to buy domestic made products unless comparable foreign made products are substantially cheaper o Technical barriers: National standard for health, safety & labeling.
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Other restrictions have resulted from laws requiring governments to buy from domestic suppliers. o International Cartels An international cartel is an organization of suppliers of a commodity located in different nations that agrees to restrict output and exports of the commodity with the aim of maximizing profits or increasing the total profits of the organization. o Dumping is the export of a commodity at below cost or at least the sale of a commodity at a lower price abroad than domestically.
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Export Subsidies Export subsidies are direct payments or the granting of tax relief and subsidized loans to the nation's exporters or potential exporters and/or low-interest loans to foreign buyers so as to stimulate the nation's exports. As such, export subsidies can be regarded as a form of dumping. Although export subsidies are illegal by international agreement, many nations provide them in disguised (hidden) and not-so-disguised forms.

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Quantitative Restrictions(Quotas):
A quota is the most important nontariff trade barrier. It is a direct quantitative restriction on the amount of a commodity allowed to be imported or exported. So we have import quotas and export quotas.

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