INTERNATIONAL TRADE POLICY

International Business and Trade Policy

International Business and Trade Policy

Introduction

The aim of every government in the world to maximize their wealth, whether this was done to achieve a good standard of living of their populations or make the rich even richer minority is not relevant for this paper. The best and easiest way to reach is well off national industries. However, to enable them to make prosper national industries, the governments with the dilemma of the implementation of protectionist or free trade policies are facing. If they want to go with the former, they have all types of import restrictions, while if the latter, they must decide to liberalize their markets.

Aims and Objectives

As with anything in life there are no black and white solution, as the advantages and disadvantages of both, and there are a number of ways between trade policy, which wholly owns at the rules of free market and an independent policy, where it is almost no interaction with the world market. This paper aims to take in more detail at the various options of a government, and how policies can influence could look like the economic growth of a country. More specifically, the paper is to the protectionist measures that can concentrate to be implemented. This will be done with special attention to the two main forms of trade barriers, namely tariffs and non tariff barriers, and the effect it has on trade.

General Agreement on Tariffs and Trade Analysis

After the Second World War there was a widespread liberalization of markets, general economic growth out. It was an unmistakable attempt by industrialized countries to try and regulate the international trading system. This was facilitated by the emergence of a global system of rules that determine the international market and have been trained through the creation of the General Agreement on Tariffs and Trade (GATT). GATT was created after the Bretton Woods talks, revealing the common resolve of the Western nations were to establish an international trading system. Originally it was an interim agreement, which consisted of a series of binding agreements between the 23 developed nations and signed in 1947(Gordon, 2004, 55).

The primary means by which were GATT objective of promoting the free trade agreement between parties to achieve was to foster a general regulation and reduction of tariffs. One of the innovative components of the GATT was that there was a dispute settlement procedure that enabled governments to assert their claims to a panel of GATT members present and they would in turn help them reach a settlement offer, but how GATT itself was a non-binding agreement, the decisions that have been achieved through this mechanism, were not waiting too. This in turn most of the GATT agreement was ineffective (McDonald, 2004, 566).

The basic definition of tariffs is that they are a tax on goods produced abroad and sold domestically and it can also be described as an import tax. Tariffs have the effect to curb the international specialization and reduce economic welfare because it ...