INTERNATIONAL TRADE BARRIERS WORK

Economists generally believe that trade barriers decrease overall economic

efficiency. In theory, free trade expects removal of all such barriers, excepting
those considered necessary for well-being or security of a country or nation-State.
In practice, though, even countries promoting free trade heavily subsidize some
of their own industries, especially agriculture and steel. In recent years, free trade
agreements between two or more nations have become common. For instance,
North American Free Trade Agreement (NAFTA), South Asia Free Trade
Agreement (SAFTA), European Free Trade Association, European Union (EU),
Union of South American Nations.

Other variants of trade barriers result from differences in culture, customs,

traditions, laws, language and currency. Countries and nation-States do differ
from one another and do not follow common and uniform laws, procedures and
customs. According to an analyst, current debate and differences over free trade
include such barriers as:

1. Intellectual property infringement—including copyright, patent and

trademarks.

2. Customs procedures that are not uniformly applied.

3. Lack of competitive bidding for foreign government tenders.

4. The application of direct or indirect subsidies by a foreign government in favour
of domestic suppliers.

5. Burdensome certification and testing requirements that are not required by

domestic manufacturers.

6. Influence pedalling—A corporate entity or country is interfering with fair trade

practices at other’s expense.

7. Bribery, corruption and requests for payoffs—When foreign bribery prevents

you from competing fairly on the basis of price, quality or service.

Trade barriers work because they are effective in protecting a country’s own
interests; both industry and services sectors do need protection and promotion so
that they continue to make their contribution to the country’s economy and well-
being, keep workers employed and increase country’s prosperity without undue
competition from other countries. But, in global context, trade barriers or
protective measures may not be so beneficial as some economic protections are
more costly than others and can trigger a trade war.

As far as subsidies are concerned, poorer countries do not have the ability to
raise subsidies and are more vulnerable than richer countries in trade wars. By
raising protections against dumping of cheap products, it risks making the product
too expensive and beyond the means of its people.
Whether trade barriers work or are beneficial has different answers. When
viewed from an individual country’s perspective, in an unequal world it becomes
necessary to protect its interests and trade barrier is a handy protective tool for
the purpose. But from the world perspective, trade barriers only impede trade
and raise costs of goods and services. Yet, the least developed countries remain
helpless because they are not powerful enough to use trade barriers as protective
shield. They have to depend on richer and powerful countries for their growth
and well-being.

Rich nations must redress the deep inequities in the trade system and reverse the
marginalisation of poorer countries. However, World Trade Organisation’s current
con-figuration makes this impossible, and extending its work into new areas of
the global economy will only make matters worse.