International Trade and Trade Barriers

1. International Trade
• International trade is the trade between different countries.
• International trade on large scale has become a phenomenon of the
20th century especially after the Second World War.
• International trade, thus, has become as essential ingredient of the
normal economic life of any country.

2. Benefits of International Trade for Developing Countries

• Trade enhances competitiveness by helping developing countries
reduce the cost of inputs, acquire finance through investments,
increase the value added of their products.
• Trade can help boost development and reduce poverty by
generating growth through increased commercial opportunities and
investment.
• Trade facilitates export diversification by allowing developing
countries to access new markets and new materials which open up
new production possibilities.
• Trade encourages innovation by facilitating exchange of know-how,
technology and investment in research and development, through
foreign direct investment.

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• Trade openness expands business opportunities for local
companies by opening up new markets, removing unnecessary
barriers and making it easier for them to export.

3. Trade Barriers
• Trade barriers are measures that governments or public authorities
introduce to make imported goods or services less competitive than
domestically produced goods and services.
Types of Trade Barriers:
1.Tariffs: Is a tax on imported good or service which increases the
price of the imported products.

2.Quota: Is a limit on the quantity that can be imported.

3. Embargo: a ban on trade with a country or a group of countries,

usually for political reasons.

4. Voluntary Export Restraint (VER): a limit on the quantity of a good

that can be exported from a country during a specified time period.

Trade Barrier Benefits Costs

Protective tariff •Saves jobs in •Raises prices for
protected industries. domestic consumers.
•Reduces competition
in protected industries.
•Raises revenue for
government.

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Import quota •Saves jobs in •Limits product choices
protected industries. for consumers.
•Reduces competition •Raises prices for
in protected industries. domestic consumers.

Trade embargo •May bring about policy •May lead to economic

changes in targeted hardship for people in
country. targeted country.

Voluntary Export •Reduces risk of trade •Hurting domestic

Restraint (VER) restrictions being producers by limiting
imposed by another their foreign sales.
country.

Q1: Mention the objectives and action plans of Agadir agreement.

• Objective:
1. Establishing a free trade area in accordance with the provisions of
the general agreements on tariffs and trade of (1994).
2. Developing economic activity.
3. Supporting employment.
4. Increasing productivity.
5. Improving living standards within the member countries.
• Action Plan:
1. Full exemption from customs duties, and taxes for industrial and
agriculture manufactured goods.
2. Connect member states to a transport network to increase trade
exchange.
3. Liberalization of the services sector in accordance with general
agreement on trade in services of (WTO) world trade organization.
4. Remove all non-tariff restriction such as (monetary, administrative,
quantitative, technical).
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5. Co-ordinations of sectoral and macro policies

Q2: Explain the objectives of COMESA.

• Objective:
1. Strengthen Market Integration
2. Attract Increased Investments
3. Strengthen the Blue / Ocean Economy
4. Harness the Benefits of Strategic Partnerships
5. Strengthen Development of Economic Infrastructure (Energy,
Transport and ICTs)
6. Industrialization

Q3: Explain the results for the free trade agreement between
EFTA and Egypt.

1. Trade in Goods: Bilateral trade in goods between the EFTA States

and Egypt.
2. Agricultural products: trade in basic agricultural products and the
relief of most Egyptian exports of the agricultural products from
tariffs.
3. Fish and other marine products: The Agreement covers trade in
all fish and other marine products, the EFTA countries grant duty-
free access on imports for all Egyptian fish products.
4. Industrial Goods: Egyptian exports into the EFTA States are duty-
free since the entry into force of the Agreement.
5. Customs duties on imports: Egypt has gradually abolished its
customs duties on imports and any charges having equivalent effect
on products originating in an EFTA States.

Q4: Compare between the strengths and weaknesses of GAFTA

agreement.
• Strengths:
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1-The tariff reduction rate reached 100% starting in 2005
2- The existence of an explicit provision of the agreement to cancel all
duties and other taxes of similar effect.
3- Establish contact points for the Arab member states for solving
problems that face the Arab and intra-Arab trade.
4- Cancellation of certification of certificates of origin, invoices and
accompanying documents by embassies and consults.
5- Setting the specific rules for resolving disputes in the Greater Arab
Free Trade Area.
• Weaknesses:
1- The establishment of detailed rules of origin has not yet completed
despite the near application of the full customs exemption for Arab
goods.
2- Non-standardization among Arab countries.
3- Some countries adopt protectionist and quantitative and qualitative
restrictions by imposing technical restrictions on imports.

Q5: Explain the objectives of the GAFTA agreement.

1- Development of economic and trade relations between Arab states.
2- Enhance joint economic gains of the Arab countries.
3- Maintain the economic interest of Arab countries.
4- Take advantage of the changes in the global trading system.
5- The development of economic and trade relations with the outside
world.

Q6: Explain the action plans and the results of the EU-partnership
agreement.
• Action Plan:

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1. Monetary and fiscal policies: are aiming at improving
macroeconomic stability and promoting economic growth and
employment. They continue to pursue macroeconomic stability by
reducing the inflation rate and gradually achieving price stability.

2. Mineral resources - Encourage cooperation between EU Member

States and Egypt to develop the mineral resources sector.

3. Agriculture and fisheries - Pursue the modernization and

restructuring of agriculture and fisheries

4. Strengthen efforts and co-operation in the fight against money

laundering, financial and economic crime.

5. Exchange information on the existing European structures

6. Strengthen Egypt’s system of financial and security information.

• Results:

1. Growing trade: Since 2004, EU-Egypt bilateral trade has more than
doubled and reached its highest level ever in 2016.
2. Financial support: The European Neighborhood Policy provides for
political and financial assistance Egypt.
3. Agricultural and Processed Agricultural Products:
- An increase in the number of Egyptian agricultural products
exported to the EU.
- Reduced entry prices on certain Egyptian products; for example,
oranges and cut flowers.
4. Egyptian Economy Modernization and Capacity Building
Programs:

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 The Association Agreement also provides financial and technical aid
to boost the Egyptian economy in terms of the industrial sector
modernization.
5. Business and Investment: The Agreement will attract EU direct
investment in Egypt.

Q7: Explain the objectives of the Egypt-Turkey free trade

agreement.
• Objective:
1– The two parties will establish a free trade area between them over a
transitional period of no more than twelve years of FTA's date of entry
into force.
FTA aims at:
a) Increasing and enhancing economic cooperation between the two
parties in order to raise the standard of living of the peoples of both
countries.
b) Removing obstacles and restrictions on trade in goods, including
agricultural goods.
c) Developing economic relations between the two parties by
increasing mutual trade.
d) Providing fair competition in trade between the two sides.
e) Developing trade and cooperation between the two parties in the
markets of third countries.

Q8: Explain the results of the COMESA agreement and the

obstacles that limit Egypt's access to COMESA.
• Results:

1. the increase in trade rates between Egypt and the rest of the
member countries.

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2. Egyptian exports increased gradually and the balance of payments
achieved a trade surplus.

3. Egypt also benefited from the import structure of the member

countries.

• The obstacles that limit Egypt's access to COMESA:

1. Lack of funding for joint investment projects.
2. Lack of transportation, whether by sea, air or land, and lack of
means of communication.
3. Lack of adequate data on conditions, resources, etc., which helps in
proper planning.
4. Problems related to different procedures and systems.
5. Lack of coordination among banks in member countries.