Trade Policy
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Trade policy defines standards, goals, rules and regulations that pertain to trade relations between countries. These policies are specific to each country and are formulated by its public officials. Their aim is to boost the nation’s international trade. A country’s trade policy includes taxes imposed on import and export, inspection regulations, and tariffs and quotas.
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Constituents of Trade Policy
A trade policy generally focuses on the following specifications in terms of international trade:
Trade policy defines standards, goals, rules and regulations that pertain to trade relations between countries. These policies are specific to each country and are formulated by its public officials. Their aim is to boost the nation’s international trade. A country’s trade policy includes taxes imposed on import and export, inspection regulations, and tariffs and quotas.
Constituents of Trade Policy
A trade policy generally focuses on the following specifications in terms of international trade:
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Tariffs: Every country has the right to impose taxes on imported and exported goods. Some nations levy heavy tariffs on imported goods to protect their local industries. High import taxes inflate the prices of imported goods in local markets, ensuring that local products are more sought after.
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Trade barriers: They are state-imposed restrictions on trading a particular product or with a specific nation. Some of the most common forms of trade barriers are tariffs, duties, subsidies, embargoes and quotas.
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Safety: This determinant ensures that only high-quality products are imported in the country. Public officials can lay down inspection regulations to ensure that the imported product conform to the set safety and quality standards.
Types of Trade Policy
Trade policies can assume varying dimensions and scope depending on the number of parties involved in the policy. Consider the following types of trade policies:
National trade policy: Every country formulates this policy to safeguard the best interest of its trade and citizens. This policy is always in consonance with the national foreign policy.
Bilateral trade policy: This policy is formed between two nations to regulate the trade and business relations with each other. The national trade policies of both the nations and their negotiations under the trade agreement are considered while formulating bilateral trade policy.
International trade policy: International economic organizations, such as Organization for Economic Co-operation and Development (OECD), World Trade Organization (WTO) and International Monetary Fund (IMF), define the international trade policy under their charter. The policies uphold the best interests of both developed and developing nations. The best example is the Doha Development Agenda which was formulated by the WTO.
Trade Policy and International Economy
As open market economy prevails in most developed countries, international economic organizations support free trade policies while developing nations prefer partially-shielded trade practices to protect their local industries.
Today’s era of globalization depends on sound trade policies to reflect market changes, establish free and fair trade practices and expand the possibilities for booming international trade.
