International Trade and Its Barriers

Muhammad Haseem (BB 5468)

Syed Saif Ahmed (BBE-1943)
Abuzar Hasani (BB-5387)
Hassan Atique (BB-5617)
Noman Gulzar (BB-5537)
Topics
What is Trade?
History of Trade
What is International Trade?
Advantages International Trade
Disadvantages International Trade
What is Barrier?
Advantages of Barriers
Disadvantages of Barriers
 What is Trade?
Buying-selling or exchanging
goods and services between
people, companies, countries,
and other entities
History
International Trade
International Trade refers to the
exchange of products and
services from one country to
another.
Advantages of International Trade

Comparative Advantage: 
Trade encourages a nation to specialize in producing or supplying only those goods and
services which it can deliver more effectively and at the best price, after taking into
account opportunity cost

Economies of Scale: 
If you sell your goods globally, you will have to produce more than if you sold just
domestically. Producing in higher volumes provides greater economies of scale. In
other words, the cost of producing each item is lower.
Competition: 
International trade boosts competition. This, in turn, is good for prices and quality. If
suppliers have to compete more, they will work harder to sell at the lowest price and
best quality possible. Consumers benefit by having more choice, more money left
over, and top-quality goods.

Transfer of Technology: 
Increases thanks to international trade. Transfer of technology goes from the
originator to a secondary user. In fact, that secondary user is often a developing
nation.

Jobs:
Great trading nations such as Japan, Germany, the UK, the USA, and South Korea have
one thing in common. They have much lower levels of unemployment
than protectionist countries.
Disadvantages of International Trade
Over-Specialization:
Employees might lose their jobs in large numbers if global demand for a product
declines.

New Companies: 
Find it much harder to grow if they have to compete against giant foreign firms.

National Security: 
If a country is totally dependent on imports for strategic industries, it is at risk of
being held to ransom by the exporter(s). Strategic industries include food, energy and
military equipment.
What is Barrier?
A barrier to trade is a government-
imposed restraint on the flow of
international goods or services
Disadvantages of Barriers
Limited Product Offering
The increase in import costs translates into a limited choice of products. Small
businesses, for instance, might not be able to afford to pay these costs so that they
will offer fewer goods. ☆Barriers Result in Higher Costs

Loss of Revenue
 
Many companies make their money off international trade. Automobile manufacturers,
for example, sell cars in foreign markets. Trade barriers can limit their ability to
export products, leading to loss of revenue and decreased profit
Reduced Economic Growth
 
Trade barriers affect economic growth in developing countries, which are unable to
export goods because of high tariffs, thus limiting their ability to prosper and expand
their operations. Furthermore, it has a direct impact on wages and international
relations.
 
Fewer Jobs Available
 
Nowadays, many organizations have offices and factories in multiple locations across
the world, which allows them to employ locals and pay higher wages compared to the
national average.
Advantages of Barriers

Increased Consumption of Local Goods

 
Duty tax increases the overall cost of imported goods and services. When a
government levies this tax on imports, it aims to discourage local consumers from
importing. 

Improved Consumer Protection

 
The government sets import regulations on some consumer goods to ensure they are
safe for domestic use or consumption
Increased Domestic Employment
 
As the consumption of local goods increases, so does the demand. To satisfy the
growing consumer demand, domestic producers have to produce more products.
 
Enhanced National Security
 
The national security of a government that heavily imports military weapons can be
compromised should the exporting country restrict the export of the weapons. To
prevent this from happening, a government, especially that of a developed country,
tries to encourage domestic production of defense equipment.
 
Enlarged National Revenue
 
Levying tariffs on imported goods and services is a strategy governments can use to
increase national revenue. The duty from importers goes directly to the government’s
revenue collection agency.