Barriers to trade have existed since time immemorial. To begin with, it was the natural barriers in the form of mountains, seas, rivers and geographical remoteness. But continuous innovation in transportation has helped to overcome this problem. The biggest obstacle to trade now is the man- made.
Despite national trade policies marching on to be outward-oriented, in the global trade it is global to find significant trade barriers to protect a country’s market from intrusion by foreign firms. All nations apply barriers, obstacles or trade impending factors – the difference is only that of degree.
“Protectionist barriers to economies are what steroids are to athletes – a temporary fix and a long-term disaster.”
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Protectionism ultimately hits the protectionist. The National Trade Estimate Report on Foreign Trade Barriers has defined trade barriers as ‘government laws, regulations, policies, or practices that either protect domestic producers from foreign competition or artificially stimulate exports of particular domestic products.”
Onkvisit and Shaw identify 850 ways of reducing imports and claim nations have been known to use all of them. Their research shows that large proportions of many manufactured goods are overtly protected, the main protagonists being the US, Italy, France and Germany. However, now the major barriers are becoming a cover, i.e., non-tariff barriers.
According to World Bank estimates abolishing all trade barriers could increase global income by US$ 2.8 trillion and lift 320 million people out of poverty by 2015. Estimates also indicate that removing all subsidies to agriculture in OECD member countries alone could return to developing and least developed countries – the poorest of the poor – three times more than all the overseas development assistance (ODA) they currently receive. And complete liberalisation in all sectors – agriculture, services and manufactures – would, by some estimates, benefit these countries by almost eight-times ODA.
The reasons, rationale or objectives behind trade barriers are numerous.
We have clubbed them under the following heads:
i. Economic Arguments
ii. Strategic Arguments
iii. Emotional Arguments