Foreign Trade Policy
Introduction
Foreign trade policy is a set of regulations set out by a government to determine the quantity, quality and pricing of goods imported and exported from a country. It consists of various measures, such as tariffs, duties, taxes, regulatory measures, export quotas, subsidies and export promotion programs, to promote exports and protect the domestic market from foreign competition. The goal of foreign trade policy is to enable a country to increase its exports and become more competitive in the global market.
A country’s foreign trade policy can have a significant impact on its economic and social objectives. Its primary purpose is to protect domestic firms from foreign competition and to ensure a stable balance of payments. The foreign trade policy also affects employment levels, wages and the prices of goods and services. By controlling the flow of imports and exports, a country can protect its domestic working conditions and employment standards, as well as promote its own products and services in international markets.
Tariffs and Quotas
Tariffs and quotas are two of the most common measures used to control a country’s foreign trade. A tariff is a tax imposed on imports or exports which increases the price of the goods in the importing or exporting country. The purpose of this measure is to make imported goods more expensive, providing protection to domestic industries, as well as generating government revenues.
Quotas, on the other hand, limit the amount of goods that can be imported or exported within a certain period of time. They are seen as an alternative to tariffs, as they can have the effect of reducing competition from foreign firms and thus protect domestic producers from foreign competition. Quotas must be approved by the WTO, which ensures the quota does not go against the principles of trade liberalization.
Regulatory Measures
Regulatory measures are another aspect of a foreign trade policy and may include non-tariff barriers such as health and safety regulations, licensing and quality control requirements, and sanitary and phytosanitary standards. Such measures are designed to protect public health and safety as well as the environment, and to ensure a fair marketplace.
Subsidies and Export Promotion
Subsidies and export promotion measures are often used by countries to support their domestic producers and promote their own exports. Subsidies are direct payments made to domestic producers to increase their production, while export promotion refers to policies such as advertising, coordinating exports, organizing trade fairs and exhibitions, and providing low-cost financing to the exporters.
Conclusion
Foreign trade policy is an important part of a country’s economic strategy and can have a significant impact on its economic and social objectives. By using measures such as tariffs, quotas, regulatory measures, subsidies and export promotion, countries can protect their domestic markets from foreign competition, generate government revenues, enhance their own competitiveness in the global market and promote their own products and services.
