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Discuss The Various Forms Of Non-Tariff Barriers Used By Countries To Limit The Free Flow Of Trade.

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Introduction

1. Discuss The Various Forms Of Non-Tariff Barriers Used By Countries To Limit The Free Flow Of Trade. 'A non-tariff barrier may be defined as any regulation other than a tariff or other discretionary policy that restrict international trade. This includes measures taken at the border such as quantitative restrictions on access and procedures that favour domestic products over imports, for instance, subsidies'1 Gilberto Sarfati With the success of trade liberisation in manufacturing products, the major remaining barriers to trade are non-tariff barriers (NTB), such as government procedurement policies, customs procedures, health & sanitary regulations, national standards and a broad range of other laws and regulations that discriminate against imports or other assistance to exports. Other examples of non-tariff measures are regional policy, agricultural policy, consumer & environmental protection. Governments have tried to insulate the domestic economy from international competition through various national policies.; * Use of a combination of tax and financial incentives and requirements for local content, export performance and technology transfer for foreign investors * Use of subsidies & tax preferences to help ailing industries, e.g. steel / ship building * Provide incentives for the development of new, technologically sophisticated industries - aerospace, IT / computers As can be seen, many mechanisms are used to restrict imports, which of course can be implemented in various ways. ...read more.

Middle

Multiple exchange rate programmes were rare in the 1990's, and generally have not been exploited by developed countries. 1.6 Technical Barriers To Trade All countries impose technical rules about packaging, product definitions, labelling etc. In the international trade context, such rules may also be used as non-tariff trade barriers, often imposed in the knowledge that certain imported goods will be unable to meet the requirements. The British government used such standards, to prevent imports of French turkeys and ultra-heat treated UHT milk. The ban on turkeys was to prevent 'Newcastle Disease', a form of fowl pest found in Europe, reaching the UK. However the European Court ruled that the ban was merely an excuse to prevent the free flow of imports. Meanwhile, the EU is continuing to ban US beef treated with hormones, despite a ruling from the WTO that the meat fulfils the requisite safety conditions. 1.7 Subsidies Alternative method is to provide a subsidy to domestic producers so as to improve their competitiveness in both the home and world markets. In general subsidies can be focused upon specific industries or upon the export activities of the industry. The revenue implications for a government are vital in distinguishing between tariffs & subsidies. ...read more.

Conclusion

However, with globalisation increasingly being seen as the cause of much upheaval and insecurity in industrialised countries, the risk remains of a retreat towards protectionism. 'Protectionist policies are used by governments to shield domestic producers from foreign competition. However, they do not serve the long-term national interests, as they tend to preserve inefficient, unproductive industries rather than encouraging potentially more prosperous ones. Whilst trade liberalisation alone does not produce economic success, over the past thirty years those countries with the highest levels of integration in the world economy have achieved the fastest growth in living standards. An open, transparent and stable world trading system maximises global prosperity. Trade allows countries to specialise in the activities, which employ their relative strengths, resources and expertise. Countries are able to specialise in producing the things they are best at relative to other countries. This results in much better allocation of resources. Allowing countries to specialise in the production of goods and services in which they have a comparative advantage, and exchange them in international markets, increases the incomes of all countries over the longer term'5 1 http://eiop.or.at/eiop/pdf/1998-002.pdf 2 The effect of a quota - Applied Economics, 9th Pg 717 3 GATT / WTO, Applied Economics, Pg 710 4 http://www.gatt.org/ 5 http://www.dti.gov.uk/ewt/whymore.htm ?? ?? ?? ?? European Union Trade BA (HONS) Business Administration - Year 2 1 Taranum Mirza - 1st April 2004 ...read more.

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