Trade barriers in the context of "Economic integration"

⭐ In the context of economic integration, trade barriers are considered…

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⭐ Core Definition: Trade barriers

Trade barriers are government-induced restrictions on international trade. Most trade barriers work on the same principle: the imposition of some sort of cost (money, time, bureaucracy, quota) on trade that alters the price or availability of the traded products. Barriers take the form of tariffs (which impose a financial burden on imports) and non-tariff barriers to trade (which uses other overt and covert means to restrict imports and occasionally exports). Trade barriers have been criticized for their negative impacts on consumers and their unequal applications to developing countries.

The use of trade barriers has shifted throughout history. Protectionist policies were commonplace in the mercantilist era, but a combination of industrialization and liberalization led to a shift towards free trade in the mid-to-late 19th century. The interwar period led to a regression back to protectionism, but post-WWII there was a near-universal commitment to multilateralism and the creation of international organizations that led to lower tariffs and decreased protectionism. While organizations like the World Trade Organization still provide an avenue for trade negotiations, in recent times there has been a shift away from trade openness and towards plurilateral agreements and regionalism.

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👉 Trade barriers in the context of Economic integration

Economic integration is the unification of economic policies between different states, through the partial or full abolition of tariff and non-tariff restrictions on trade.

The trade-stimulation effects intended by means of economic integration are part of the contemporary economic Theory of the Second Best: where, in theory, the best option is free trade, with free competition and no trade barriers whatsoever. Free trade is treated as an idealistic option, and although realized within certain developed states, economic integration has been thought of as the "second best" option for global trade where barriers to full free trade exist.

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Trade barriers in the context of Free trade agreement

A free trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating states. There are two types of trade agreements: bilateral and multilateral. Bilateral trade agreements occur when two countries agree to loosen trade restrictions between the two of them, generally to expand business opportunities. Multilateral trade agreements are agreements among three or more countries, and are the most difficult to negotiate and agree.

FTAs, a form of trade pacts, determine the tariffs and duties that countries impose on imports and exports with the goal of reducing or eliminating trade barriers, thus encouraging international trade. Such agreements usually "center on a chapter providing for preferential tariff treatment", but they also often "include clauses on trade facilitation and rule-making in areas such as investment, intellectual property, government procurement, technical standards and sanitary and phytosanitary issues".

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