Here are some key terms relating to barriers to trade (protectionism). Check your understanding with this updated Quizlet Revision Activity! Show
Key terms on barriers to trade (protectionism)Ad valorem tariff An import tax charged as percentage of the price Administrative barriers Regulations on imports such as animal welfare standards and energy efficiency requirements Anti-dumping duty Tariff on goods deemed to be causing injury to domestic producers of competing products Competitive devaluation When a country deliberately intervenes to drive down the value of their currency to improve price competitiveness Customs Union Countries that have free trade between them but apply a common external tariff to imports Dumping Occurs when goods are exported at a price less than their normal value or at less than production cost. Embargo A complete ban on importing a good perhaps done on grounds of consumer protection Exchange controls Limits on foreign exchange that can move between countries - also known as capital controls Export subsidy Payment to a domestic firm to encourage them to sell surplus output in another country Import licence The need to obtain a permit for importing a product Infant industry argument Protectionism for a fledgling sector to allow them to develop a cost advantage / economics of scale Local content law Requirement that products sold in a particular country be at least partly made there Murky protectionism Attempts to distort trade via state aid, bail-outs, laws on takeovers and managed currencies Quota Physical limit on the quantity of a good that can be imported into a country Specific tariff A set amount (e.g. £s, $s) per unit imported Voluntary export restraint Where two countries make an agreement to limit the volume of their exports to one another In this video we revise the welfare losses that can arise when a government introduces an import tariff. Welfare Loss from Import Tariffs - A Level and IB Economics In this revision video we look at the issue of import dumping and the response of countries using retaliatory anti-dumping duties. Import dumping happens when firms sell their exports at below average cost or below their normal prices in the home market. The former implies predatory pricing – which is illegal. Dumping might be part-financed by government subsidies. Economics of Anti-Dumping Import Tariffs I A Level and IB Economics Non-Tariff Barriers (NTBs) may include any policy measures other than tariffs that can impact trade flows. As average import tariffs in the world economy have fallen, so NTBs have become more common! Trade Protectionism - Ten Examples of Non-Tariff Barriers A government restriction placed on the import or export of goods, services, currency, and other values to any other country or state What is an Embargo?An embargo is a government restriction placed on the import or export of goods, services, currency, and other values to any other country or state. It can be imposed both in war and peacetime, covering all aspects of trade and economic activity. Embargoes can be placed on specific categories of goods, scientific and technical information, transport and other services, etc.  In modern international relations, an embargo acts as an instrument of economic, scientific, technical, and financial pressure, aimed at forcing changes in the target state’s internal and foreign policies. Summary
Imposing an EmbargoThe variety of historical and modern cases of establishing an embargo makes it possible to classify the use of such a policy in foreign trade activities on various grounds. Embargoes are most often directed at a country or a group of countries. For example, the embargo can be imposed against a criminal or terrorist organization. The United Nations provides the possibility of imposing an embargo as a collective repressive measure against a specific country or countries whose actions pose a threat to international security. The restrictions may serve as a basis for suspending or terminating the performance of all or some specific obligations of specific countries, their organizations, and citizens. Types of EmbargoesThere are several forms of embargoes that can be imposed on a state or country, including:
Some trade embargoes allow the exchange of certain goods, such as food and medicine, to meet humanitarian needs. Also, most multinational embargoes contain provisions that allow certain types of exports or imports under a limited set of restrictions. Consequences of an EmbargoEmbargoes are not violent methods of influence, but they can still harm people and the economies of the countries involved. An embargo can block the importation of important goods and services to the civilian population of the state that is subject to the restriction. In a state that imposes an embargo, businesses may lose the ability to trade or invest in the state that is subject to the embargo. According to the Geneva, Switzerland-based World Economic Forum, the result of multinational embargoes is never a “zero-sum game.” Relying on the power of a government, a state with a stronger economy can cause more damage to the target state than it will suffer in response. However, the punishment does not always lead to a change in the embargoed government’s political behavior. Additional ResourcesCFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:
What is a complete halt to trading with a particular nation or in a particular product is called an?A complete halt to trading with a particular nation or in a particular product is called an embargo.
Is a type of trade penalty imposed on one or more countries by one or more other countries?Economic sanctions are commercial and financial penalties applied by one or more countries against a targeted self-governing state, group, or individual. Economic sanctions are not necessarily imposed because of economic circumstances—they may also be imposed for a variety of political, military, and social issues.
Which of the following best describes sanctions?Which of the following best describes sanctions? They are politically motivated trade restrictions that revoke a country's normal trading status with another nation.
Is a tax levied on a particular foreign product entering a country?What Is A Customs Duty? Customs Duty is a tariff or tax imposed on goods when transported across international borders.
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When a country suspends trade of a particular product or with a particular country they are using which type of trade restriction quizlet?
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