Trade barrier

Trade barriers are generally government-induced limitations on international trade. The barriers can take several forms, for example the following:

• Tariffs
• Non-tariff barriers to trade
• Import licenses
• Export licenses
• Import quotas
• Subsidies
• Voluntary Export Restraints
• Local content requirements
• Embargo
• Currency devaluation
• Trade restriction

Most trade barriers operate on exactly the same principle: the imposition of some kind of cost on trade that increases the asking price of the traded products.  If 2 or more countries frequently use trade barriers against 1 another, then a trade war final results .

Economists usually agree that trade barriers are harmful and reduce total economic efficiency , this is often explained by the idea of comparative advantage . In theory, totally free trade involves the removal of just about all this kind of barriers, except perhaps those considered essential for health or national safety. In fact, however, even those countries promoting free trade greatly subsidize specific industrial sectors, such as agriculture and steel.

Trade barriers are often criticized for the effect they have on the developing world. Because rich-country players call most of the shots and set trade policies, goods such as crops that developing countries are best at producing still face high barriers. Trade barriers such as taxes on food imports or subsidies for farmers in developed economies lead to overproduction and dumping on world markets, thus lowering prices and hurting poor-country farmers. Tariffs also tend to be anti-poor, with low rates for raw commodities and high rates for labor-intensive processed goods. The Commitment to Development Index measures the effect that rich country trade policies actually have on the developing world.