Forms of Protection in International Business

Forms of Protection in International Business

 

What Is Free Trade?

  • Free Trade is a trade policy that does not restrict imports or exports.
  • Under this government imposed absolutely no tariff’s,  taxes, or duities on imports, or quotas on exports.
  • Is a free trade area (FTA) is  where there are no import tariffs or quotas on products from one country entering another.

*EFTA : European Free Trade Association Comists Of Norwa, Iceland, Switzerland & Liechtenstein.

Forms Of Protection in International Business

Advantages of free trade :-

  1. International Specialization
  2. Increase in world Production and World Consumption
  3. Safeguard against the advent of Monopolies
  4. Links with other Countries
  5. Higher Earning Of the Factors Of Production
  6. Benefits to Consumer
  7. Higher efficiency and optimum utilization of resources

Disadvantages of free Trade:-

  1. Obstacles to the Development Of home industries
  2. Imports of Expensive harmful goods

 

Forms Of Protection 

 

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Forms Of Protection in International Business

 

1.Tariff’s 

  • Tariff’s are used to restrict imports
  • Teriff is a tax imposed by a government on goods and services imported from other countries
  • That serves to increase the price and make import less desirable, or at least less Competitive, versus domestic goods and services
  • A tariff designed to make imports more expensive than domestically produced products
  • Also called “custom duties or import fees”.

Different types of tariffs:-

  • A specific tariffs (a flat tax on certain goods & services)
  • An ad valorean Tariff (a tariff that represents a percentage of an imports worth)

2. Non-Tariff Barrier Includes

Non tariff barriers are government policies and administrative practices that regulate or restrict the foreign trade.

a. License – Permits to import goods

b.Quotas– Limitation on the amount/quantity of goods that can be imported/exported

c. Embargoes 

  • Embargoes restrict the trade of specific goods and services
  • Embargoes are a measure used by governments for specific political or health circumstances
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d. A voluntary export restraint 

Is a limit on the amount of a certain goods that can be exported to a certain country

e. An Import license/Quotas 

A limits on the numbers of imports allowed

f. Subsidy 

  • Refers to the discount given by the government, Normally in the form of cash, tax relief, low cost loans etc.
  • The subsidy is given to domestic producers to increase their International competitiveness
  • Both tariffs and subsidies arise the price of foreign goods relative to domestic goods which reduce imports

g. Anti-Dumping Policy

  • Dumping refers to manufacturing firms exporting goods at lower cost/price than their domestic price or their cost of production.
  • It is a type of Preclatory Pricing.
  • Anti-dumping duty is imposed to protect local businesses and marketers from unfair competition by foreign imports
  • The government imposes anti-dumping duty on foreign imports when it believes that the goods are being ‘dumped’ – through the low pricing in the domestic market.
  • Anti-dumping investigation- ‘DGTR’
  • Imposition of anti-dumping duty is permissible under the world trade organisation (wto) regime.
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h. Administrative Policies 

  • Are bureaucratic Rules
  • These are rules and regulations made by the government to control the entry Of particular products into the country.
  • Anti-dumping is the example.

 

Conclusion: In this article we learn that Forms of Protection in International Business, Advantages of free trade, Disadvantages of free Trade, What is free Trade? This Article Is Very Important For All students who adopt ‘international Business’ Subject.

 

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