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Types of Trade Barriers

• Tariff barriers – official constraints on the importation of certain goods or services.
– Takes the form of a limitation or a special levy.

• Non-tariff barriers – indirect measures that discriminate against foreign manufacturers.

topic: International Trade Theory and Application

• Transparent and based on the value of the product or service. topic: International Trade Theory and Application . • Optimal Tariff theory – governments can capture a portion of the manufactures profit margin.Tariffs • Surcharges that importer must pay above and beyond taxes leveled on domestic goods and services. • Infant Industry theory – a industry new to a country can be protected against established global players.

• Definitive. topic: International Trade Theory and Application . • Rule of origin – administration of tariffs and quotes based on the country origin. quantifiable protection of the domestic producers.Quotas • Quantitative limits on the importation of goods.

topic: International Trade Theory and Application .Export Controls • Limitation of the type of products that can be exported to other countries. – National security risks – Dual purpose products – Goods vital to domestic industry • Companies often argue that countries will get the products from a competitor.

topic: International Trade Theory and Application . • Undermines the principles of comparative advantage. • WTO allows anti-dumping laws where there has been “material injury” to the domestic industry.Selling a product at an unfairly low price.Dumping and Anti-Dumping • Dumping .

Non-Tariff Barriers • Administrative Barriers – used to block the entry of products while arguing that no barrier exists • Production Subsidies – payments provided by a government to domestic companies to make them more competitive. topic: International Trade Theory and Application . • Emergency Import Protection – implemented to protect against a surge in imports • Foreign Sales Corporations – offshore corporations that market products and services of firms in foreign countries.

• Technical Standards – requiring a company to demonstrate that their products meet the country’s domestic standards.Non-Tariff Barriers • Embargoes – the prohibition of exportation to a designated country. • Boycotts – the blank prohibition on importation of all or some goods from a designated country. • Corruption • Barriers to Service Trade topic: International Trade Theory and Application .