| First we will discuss the concept of trading. The | | | | price level of the imported goods high and the supply |
| trading concept is centered on the simple activity of | | | | of foreign goods become limited. |
| the exchange of good or services or both. These | | | | 3. Voluntary Constraints |
| exchanges may be the ones that simply take place | | | | This is the last kind of trade barrier in which the |
| between two parties within the country or between | | | | country itself voluntarily stops the incoming products. |
| two different countries. The simple trade, which | | | | Due to this barrier the country has power to stop |
| takes place between two parties, is known as | | | | the imports coming frequently into the country and |
| bilateral trade and if these exchanges take place | | | | limiting the competition with the foreign goods with |
| between more than two parties, is known as | | | | the local industries. |
| multi-Lateral trade. | | | | These three types of trade barriers should be taken |
| Now let us deal with the issue of what International | | | | into consideration when deciding to trade |
| trade is? It is defined as exchanging of goods and | | | | internationally. Mostly lower developed countries and |
| services or both, between two or more partners | | | | the developing countries uses these kinds of trade |
| from different countries (an exporter and an | | | | barriers for their international trade and international |
| importer). | | | | business. The advantage of these barriers is as |
| The country for the purpose of importing and for | | | | follows: - |
| doing international business, generally uses the | | | | Country earns foreign exchange by putting Tariff and |
| following three barriers: | | | | non-Tariff barriers. |
| 1. Tariff Barriers | | | | The local industry of the country is protected by the |
| This is the barrier put on imports in the form of | | | | foreign competitive industries. |
| duties, tax and quotas etc. Due to which the imports | | | | Less imported goods are brought into the country |
| are less and the price level of imported products rises | | | | due to which consumer also buys local products. |
| and the demand for them decreases. | | | | The currency remains in the country due to which |
| 2. Non - Tariff Barriers | | | | government gains benefit in the form of revenue. |
| This is the barrier put by the country on imports by | | | | © 2006, Wholesale Pages UK. All rights |
| restricting quantity of importing. A fix quantity is | | | | reserved. |
| defined for the importing products that make the | | | | |