Instrument of trade policy

Instrument of trade policy

1. INSTRUMENTS OF TRADE POLICY

2. Collection of rules and regulations which pertain to
trade.
Help a nation's international trade run more smoothly,
by setting clear standards
Goals which can be understood by potential trading
partners.
In many regions, groups of nations work together to
create mutually beneficial trade policies.

3. Commercial Policy Instruments
Trade Contraction Trade
Expansion
Tariff
Export tax
Import quota
Voluntary
Export
Restraint
(VER)
Import subsidy
Export subsidy
Voluntary
Import
Expansion
(VIE)
Price Quantity Price Quantity

4. Tariffs or customs duties
Transit duties
Import duties
Export duties
Bounties on exports
Direct restriction on imports

5. TRADE CONTRACTION
VS
TRADE EXPANSION

6. Tax placed on a good
exported from a country.
Create economic barriers to trade.
Raise prices of goods.
increases the cost to sell domestic goods
overseas.

7. Trade restriction on the quantity of a good that an
exporting country is allowed to export to another
country.
Fall under the broad category of non-tariff barriers.
Effects of Voluntary Export Restraints

8. IMPORT SUBSIDY EXPORT SUBSIDY
Subsidies on goods and
services that becomes
payable to resident
producer
When goods cross the
frontier of the economic
territory or when the
service are delivered to
institutional unit
Government policy to
encourage export of
goods.
Reduces the price paid by
foreign importers.
Generated when internal
price supports, as in a
guaranteed minimum price
for a commodity.

9. an agreement to increase the quantity of imports of a
product over a specified period of time.
A change in a country's policies to allow more imports.

10. Instruments Of Trade Policy
Trade policy uses seven main instruments:
Tariffs
Subsidies
Import quotas
Voluntary export restraints
local content requirements
administrative policies,
and antidumping law.
TRIM-V,IM-M-3/By- Ms. Gazal
Sharma

12. 1.SPECIFIC TARIFFS
2. AD VALOREM TARIFFS

13. An amount of money per unit of good sold.
Governments may impose tariffs
To raise revenue or to protect domestic industries from foreign
competition, since consumers will generally purchase cheaper
foreign produced goods.
Tariffs can lead to trade wars as exporting
countries reciprocate with their own tariffs on
imported goods. (Under WTO)

14. Ad valorem, means "according to value."
levied based on the determined value of the item
being taxed.
Value of a transaction
real estate or personal property.
The most common ad valorem taxes are property
taxes levied on real estate.

15. Gainers
The government gains,
Tariff increases govt. revenues.
Domestic producers gain because
The tariff affords them some protection.
Sufferers
Consumers suffer, because they must pay more for
certain imports.

16. A payment to a domestic producer as individual, business
or institution
Form of a cash payment or a tax reduction.
Many forms including cash grants
low-interest, tax breaks and government equity
 participation in domestic and government producers.
To encourage export of goods and discourage sale of
goods
On the domestic market through direct payments, low-
cost loans, tax relief for exporters, or government-
financed international advertising.

17. Government-imposed trade
Direct restriction on the quantity
Help in regulate the volume
Imposed on specific goods
boost domestic production by restricting foreign
competition.

18. ADVANTAGE DISADVANTAGE
Foreign Exchange
Implication.
Flexibility
Corruption
Monopoly Profit
Monopoly Growth
Distortion in Trade

19. Government actions and policies that
restrict or restrain international trade,
 often with the intent of protecting local businesses and
jobs from foreign competition.
Type of policy that limits unfair competition from foreign
industries.
Politically motivated defensive measure.
Destructive in the long term.
It makes the country and its industries less competitive
in international commerce.

20. ADVANTAGE DISADVANTAGE
If a company is trying to
grow strong in a new
industry, tariffs will protect it
from foreign competitors.
Time to develop their
own competitive
advantages.
Temporarily creates jobs for
domestic workers.
Trade protectionism
weakens the industry.
The domestic product will
decline in quality

21. Way to restrict trade.
Include
 Quotas, embargoes, sanctions and other
restrictions.
Used by large and developed countries.
Economy to control the amount of trade.

22. 1. Quantity Restrictions, Quotas and Licensing
Procedures.
2. Foreign Exchange Restrictions.
3. Technical and Administrative Regulations.
4. Consular Formalities(certificates).
5. State Trading.
6. Preferential Arrangement.

23. Trade restriction
Quantity of goods that can be exported out of a
country during a specified period of time.
limitation on the amount of a product,
Protection for its domestic businesses against such
foreign competition.
Fall under the broad category of non-tariff barriers.
Quotas, Embargoes, Sanctions levies and other
restrictions.

24. Benefits
Both imports and quotas and VERs benefit
domestic producers by limiting competition.
Sufferers
VER always raises the domestic price of an
imported goods, so VER do not benefit
consumers.

25. When a foreign company makes products in a country,
the materials, parts etc that have been made in that
country rather than imported.
 A minimum level of local content is
sometimes a requirement under trade laws when
giving foreign companies the right to manufacture in a
particular place.
Rules that a company must derive a certain amount of the
final value of a good or service from domestic firms,
either by purchasing from local companies or by
manufacturing or developing the good or service
locally

26. Bureaucratic rules
designed to make it difficulty for import to enter a country.
Hurt consumers by denying access
Possibly superior foreign products.
Government of all types uses
informal or administrative policies to restrict imports & boost
exports.

27. Protectionist tariff
imposes on foreign imports that it believes are priced
below fair market value.
Penalty imposed on suspiciously low-priced imports.

Assessed generally in an amount equal to the
difference between the importing country's FOB (Free
On Board) price of the goods.