Trade Barriers: The Impact of Trade Measures on Supply and Demand Prices - Essay Example

? of Trade Barriers: The Impact of Trade Measures on Supply and Demand Prices This paper aims to evaluate different trade measures on international trade. It should be noted that every measure that will be discussed in this paper are directly proportional to the supply and demand prices. These measures include tariffs export taxes, quantitative measures, consumption taxes, subsidies etc. The fact remains that there are a couple of measures that have been affecting trade. Some of them are categorized as the tariff and non-tariff barriers. In order to provide a solution to issue of impact of trade measures on the trade, a reform of agriculture is required through World trade Organization (WTO) but even that has a number of obstacles which is coming in the way of reform. Following is the discussion regarding the impact of measures in an in-depth manner. The aspect of tariffs and non-tariff barriers has been long noted to have a direct impact on the trade sector. In order to understand the impact of these barriers on trade; it is imperative to understand these barriers. Tariff barriers are basically inclinations of taxes which are posed on the products and articles which are imported from other regions of the world. It should be noted that over the years, government has made use of the tariff barriers to control economic activity (Hont). The impact of the tariff barriers can be noted briefly as positive and negative as well. Since these tariffs limit the amount of products to be imported in the country, it is significant for the domestic brands to get maximum reach to the consumers. This makes it easier to note the articles which are more needed in the country rather than overly filling the shelves. But the fact remains that this limit also diverges the foreign investors to replicate their business in the region (Rawley and Behrendt). On the other hand, non-tariff barriers (NTBs) are notably more limiting when it comes to international trade. The non-tariff barriers undertake a number of generalizations including the licensing of the import, content regulation which is applied till the time it is sent to the market shelves (Klien). Also, technical barriers have also been considered as a more prominent limiting aspect of the NTBs. The trade barriers are merely applied to increase the trade, weaken the trade or restrict the trade. All the mentioned focus of the trade barriers are being observed in the international trading widely (Bowden). The biggest impact which has been noted over the years is that tariff barriers weaken not just the supply and demand pricing but also international trades between different countries. Overall, the border taxes, and other voluntary costs of the imports allows the government to keep a balance between the in-house domestic articles as well as international product saturation in the market (Hirschman). The major concern which has been enhanced by the international economic authorities is that the non-trade barriers have merely limit the underdeveloped countries to trade their product for economic activity since the taxes and licensing needs a lot of cost (Ransom). Also, export tax is another trade measure which has a very divergent effect on the trade which totally depends upon the market structure. It should be noted that the positive impact of the export tax on any country’s economy is in terms of domestic production (Hunt). It must be taken under account that if a country has a wider share of the international market with a respective product that it can be easier for it to reflect change on the price of the product in the international market. It is due to the aid of export taxes that these countries can exploit price of a product in the international market. Overall, it can be said that with the help of export taxes, the export of the tax-imposing nation can be reduced by large (Dunkley). Followed by the above trade measures for limiting import, consumptions tax is just another measure which has marked a quiet heavy limitation on the import. It should be noted that the domestic policies which are especially designed by underlying the consumption tax, it comes to notice that these taxes are imposed on the trade process which ultimately increases the consumer price. This makes it evident that in case the price is increased for the consumer to be paid then it affects demand for the product in a negative manner. In simpler term, it can be said that the increasing cost for consumer may reduce the demand (Lopez and Raymond). In addition to the taxes discussed in above, subsides are worth mentioning here. The observation made by a number of economists is that subsidies are counted among the measures which have been affecting the international trade but the fact remains that the impact of the subsidies is rather positive. This becomes visible in the shape of government initiatives to impose on the producers as well as on the distributors in order to make sure that the industry is making sales. It is also to make sure that the price is in control as increasing rice will need higher wages. For urban area, subsidies are basically applied in order to keep the sales and prices balance and consistent. In the context of the subsidies, it has been well understood that subsidies are more likely to make the trade operations become better, provided indirect subsidies are ignored. However, a great deal of debate has been undertaken in this regard. Overall it can be said that the subsidies are better to be implied than other trade measures in order to keep a balance of the supply and demand. However, the cost from the end of importer is likely to remain same. As the number of product items is increased on the ports, it is indicated that the import of the product will decrease greatly. The major effect of the consumption tax is noted from the consumer end. It is merely because the cost is more likely to increase by the consumption tax rate. The cost from the end of the producer is however less affected by the consumption rate. The consumption tax rate is basically received by the government. Comparing the intensity of the effects on developing and developed countries, it is just the developing countries that are undergoing the adverse effects of the consumption tax (Hertel and Hertel). All the above discussed trades measures have noted that despite the implication of the fair trade concepts, there is still a need of agricultural reform that needs to be brought through World trade organization WTO. But seemingly, there are some of the barriers which are being noticed in this regard. First of all, in order to bring an agricultural reform, there needs to be a great deal of majority. There is not much support from different countries in undertaking agricultural reform. The reform which is needed in the agriculture sector needs to be equal for all countries. But the fact remains that not al countries are read to undertake the reform. It is merely because the formulas for the trade of these agricultural may be effective for the developed countries but will not be helpful in any regard for the developing states. The negotiations which have been long made earlier involved the freeing of the markets where the tariff control was made lowered. It was predicted that by freeing the markets, it would have been easier for the new businessmen to get involved in the trade as previous tariff barriers stopped them from participating. Works Cited Bowden, R. Trade. San Francisco: Evans Brothers, 2008. Dunkley, G. Free Trade: Myths, Realities and Alternatives. Chicago: Zed Books, 2008. Hertel, T and T. Hertel. Global Trade Analysis: Modeling and Applications. New York: Cambridge University Press, 1999. Hirschman, A. National Power and the Structure of Foreign Trade. Washington DC.: University of California Press, 1980. Hont, I. Jealousy Of Trade: International Competition And The Nation State In Historical Perspective. Harvard: Harvard University Press, 2005. Hunt, J. Fair Trade. New York: Raintree, 2012. Klien, H. The Atlantic Slave Trade. Cambridge: Cambridge University Press, 1999. Lopez, R and I. Raymond. Medieval Trade in the Mediterranean World: Illustrative Documents. New York: Columbia University Press, 2001. Ransom, D. The No-Nonsense Guide to Fair Trade. New York: New Internationalist, 2006. Rawley, J and S. Behrendt. The Transatlantic Slave Trade: A History. San Francisco: U of Nebraska Press, 2005. Read More