Two main barriers: tariffs and non-tariff barriers - Assignment Example

International Trade al Affiliation) International Trade: Tariffs and Non-Tariff Barriers In the contemporary world, industries are expanding globally to venture into international markets. However, some countries place trade barriers to place restrictions to the extent in which foreign goods may enter the domestic market. For example, India adopted import-substitution ethos as early as 1950 in an effort to build the economy (Stern, 2009). It placed stringent trade restrictions that served a fundamental role in industrialization.

Such trade restrictions may take the form of tariff or non-tariff barriers. The tariff barriers take a monetary form whereas the non-tariff barriers act as regulatory measures against free trade. Tariff barriers entail duties placed on imports to restrict free trade. Tariffs increase the prices of imports ensuring that domestic producers do not have to lower their prices. A specific tariff sets a fixed amount of levy on imports regardless of the value of goods. On the other hand, an ad valorem tariff entails a percentage of the value of imports.

A country may impose environmental tariffs on imports from a country with a poor environmental history. In India, the ad valorem tariffs ensured that foreign goods did not compromise industrialization (Stern, 2009). Non-tariff barriers entail import quotas and health and safety regulations complement the tariff barriers to protect the domestic market. For example, since 1950, India placed trade policies to ensure that agriculture thrived; hence, the large number of workforce registered in agriculture (Stern, 2009).

Import quotas place a maximum amount of imports that enters the domestic market. Both tariff and non-tariff barriers aim to protect the domestic market to ensure that local producers maximize their sales. In addition, the barriers ensure that the local producers have a competitive advantage over foreign producers; hence, establishing favorable balance of payments.ReferenceStern, R. (2009). Globalization and international trade policies. Hackensack, NJ: World Scientific.