13 Lecture - Barriers to International Trade

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13 Lecture

MGT211

Midterm & Final Term Short Notes

Barriers to International Trade

Barriers to international trade refer to the various obstacles that make it difficult for businesses to engage in cross-border trade. These barriers can take many forms, including tariffs, quotas, subsidies, and non-tariff barriers such as regul


Important Mcq's
Midterm & Finalterm Prepration
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  1. Which of the following is a tariff barrier to international trade? A) Licensing requirements B) Health and safety standards C) Export subsidies D) Import duties Answer: D

  2. Which of the following is an example of a non-tariff barrier to international trade? A) Quotas B) Import duties C) Export subsidies D) Currency exchange rates Answer: A

  3. What is the purpose of a quota? A) To restrict the quantity of imports B) To increase the quantity of exports C) To reduce trade deficits D) To prevent dumping Answer: A

  4. Which of the following is an example of a subsidy? A) Import duty B) Export tax C) Government loan to a domestic industry D) Quota limit Answer: C

  5. What is the primary goal of a trade barrier? A) To increase competition B) To promote free trade C) To protect domestic industries D) To encourage foreign investment Answer: C

  6. Which of the following is an example of a voluntary export restraint? A) An import duty B) A quota limit C) An export tax D) A licensing requirement Answer: B

  7. What is the purpose of a licensing requirement? A) To restrict the quantity of imports B) To increase the quantity of exports C) To regulate the quality of imports D) To prevent piracy and counterfeiting Answer: D

  8. What is the purpose of a health and safety standard? A) To restrict the quantity of imports B) To regulate the quality of imports C) To increase the quantity of exports D) To promote fair trade practices Answer: B

  9. Which of the following is an example of a technical barrier to trade? A) An import duty B) A quota limit C) A licensing requirement D) A product standard Answer: D

  10. Which of the following is a political barrier to trade? A) A tariff B) A quota C) An embargo D) A health and safety standard Answer: C



Subjective Short Notes
Midterm & Finalterm Prepration
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  1. What are tariffs, and how do they affect international trade? Answer: Tariffs are taxes that governments place on imported goods. They increase the cost of importing goods, which can make them less competitive in the domestic market. This can lead to reduced demand for the imported goods, and can also lead to retaliation from trading partners.

  2. What is a quota, and why might a government use it to restrict international trade? Answer: A quota is a limit on the quantity of a certain good that can be imported into a country. Governments might use a quota to protect domestic industries from competition, to prevent dumping, or to reduce trade deficits.

  3. What are non-tariff barriers to trade, and why might they be used? Answer: Non-tariff barriers to trade are any barriers that restrict trade without using taxes or duties. They can include things like regulations, licensing requirements, and standards. They might be used to protect domestic industries, promote safety and health, or ensure fair trade practices.

  4. What is dumping, and how does it affect international trade? Answer: Dumping is the practice of exporting goods at a price lower than the cost of production. This can lead to unfair competition in the domestic market, and can also lead to retaliation from trading partners.

  5. What are subsidies, and how do they affect international trade? Answer: Subsidies are financial incentives that governments provide to domestic industries. They can help these industries to compete with foreign producers, but can also distort the market and lead to retaliation from trading partners.

  6. How might exchange rate fluctuations affect international trade? Answer: Exchange rate fluctuations can affect the relative prices of goods in different countries, making some goods more or less competitive. They can also affect the profitability of exporting and importing.

  7. What are the potential benefits of free trade agreements? Answer: Free trade agreements can eliminate or reduce trade barriers, making it easier and cheaper for businesses to engage in international trade. This can lead to increased competition, innovation, and economic growth.

  8. What are the potential downsides of free trade agreements? Answer: Free trade agreements can lead to job losses in certain industries, as competition from foreign producers increases. They can also lead to environmental degradation, and can exacerbate income inequality.

  9. What is an embargo, and how does it affect international trade? Answer: An embargo is a ban on trade with a particular country. It can be used to apply political pressure, to enforce sanctions, or to protect national security. Embargoes can significantly reduce trade between countries, and can lead to economic hardship for the affected parties.

  10. How can governments and businesses work to overcome barriers to international trade? Answer: Governments and businesses can work to negotiate free trade agreements, promote fair trade practices, and invest in research and development to improve competitiveness. They can also work to reduce tariffs and other barriers, and to develop alternative supply chains to reduce dependence on certain countries or regions.

Barriers to international trade refer to the restrictions and obstacles that limit the flow of goods and services between countries. These barriers can be divided into two broad categories: tariff barriers and non-tariff barriers. Tariff barriers include taxes and duties that governments impose on imported goods, which make them more expensive and less competitive with domestically produced goods. These tariffs are usually imposed to protect local industries from foreign competition. Non-tariff barriers include quotas, embargoes, and regulations that restrict the import or export of goods and services. For example, a country may place a quota on the amount of a particular product that can be imported, or it may require that all imported products meet certain safety or environmental standards. Other non-tariff barriers can include bureaucratic procedures and paperwork that make it difficult for companies to trade with other countries. These can include customs inspections, import and export licensing requirements, and complicated documentation procedures. Some of the major barriers to international trade are political instability, corruption, cultural differences, and lack of intellectual property protection. Political instability can lead to sudden changes in government policies and regulations, making it difficult for businesses to plan and invest in foreign markets. Corruption can also make it difficult for companies to operate in certain countries, as bribes and other unethical practices may be required to get things done. Cultural differences can also create barriers to international trade, as different countries have different business practices and customs. Finally, the lack of intellectual property protection in some countries can make it difficult for businesses to protect their inventions, ideas, and other intellectual property from being copied or stolen. Overall, reducing barriers to international trade is important for promoting economic growth and development, as well as for increasing access to goods and services for consumers around the world. Governments and international organizations can work together to reduce these barriers and promote more open and fair trade practices.

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