GATT ( General Agreement on Tariffs & Trades ), introduced in the year 1947, played a significant role in reducing the International Trade Barriers. The WTO with more than 150 member nations is designed to help countries negotiate new trade agreements.
WTO (World Trade Organisation), was established in the year 1995. It ensured adherence to existing trade agreements. For example, a country came with a trade policy agreement with another country. Here, WTO checks that there is no violation of policies or misunderstandings in the global trading process.
It also provides a resolution process to disputes and comes up with varied trade solutions between countries.
There are few more International trade organizations working for the cause to refine the global trade exchange supply chain that might not be known to you:
1. ASEAN: Association of Southeast Asian Nations
2. AFTA: Free Trade Area
3. NAFTA: North American Free Trade Agreement
4. MERCOSURE: Southern Common Market
Current Common Trade Barriers:
Even after the introduction of these Trade Organisations across different parts of the world to glaze & promote the Trading, we still have continuing Trade Barriers & Restrictions typically imposed by the government on the free exchange of products and services. These Trade restrictions can be of different forms such as:
1. Tariffs: These are the Taxes/ Duties levied on imported products & services. They not only allow the government to establish trade barriers but also protect domestic suppliers and encourage domestic consumer goods to promote National goods. It also helps in raising the revenue of domestic businessmen.
2. Quotas: Countries often restrict the supply of products that can be imported.
Case Scenario / Possibilities: Japan Exports Automobiles to India & Indian consumers loved the segment, there was a high demand for the Japanese automobile in India. This resulted in the decline of sales from Indian Automobile Manufacturers and probably had a negative impact on the Indian economy, such as GDP may be lower and high Unemployment.
Solution: Indian Government can restrict the volumes of imported goods in order to scale up domestic goods into the market. Indian Automobile Manufacturers can understand the taste & preference point of consumers to come up with the best automobile design at a better price to serve the Indian Markets.
3. Non-tariff Barriers: These barriers include a wide range of measures such as Licensing, Certifications, Sanctions, Permits, embargoes which makes it more restrictive, difficult, and expensive for foreign producers to compete with domestic producers. This is one of the major reasons for Final Imported goods being expensive, rare, & taking quite a long time to be delivered.
More to know:1. Trade Barriers: Difficulties experienced during the exchange of goods from one country to another.
2. Import: It refers to a product or service produced in one country and is purchased by another. For example: European Union countries import natural gas from Russia.
3. Export: It refers to the goods and services that are produced in one country and sold to buyers in another. For example: Japan exports consumer electronics to the rest of the world.
Therefore, the current trends in Imports & Exports have promoted International Trade, fewer trade barriers, better transportation & fast communication.
Stay tuned for more such insightful content regarding the International trade economy, the need for Imports & Exports Analysis of Stock Markets & personal finance (coming soon!)
