List and explain methods of trade restriction

      

List and explain methods of trade restriction.

  

Answers


sharon
a.) Tariffs
Tariffs are Taxed levied on either imports or on exports. Tariffs increases the prices of the commodities that they are levied on thereby reducing the demand for such commodities.
b.) Quotas
This refers to the restrictions on the quantity or on the value of a commodity to be imported or exported over a given period of time. A zero quota is referred to as embargo.
c.) Foreign Exchange Control
The government can therefore make acquisition of foreign exchange more difficult in order to restrict international trade.
d.) Moral persuasion
The government may appeal to importers or export to willfully restrict the importation or exportation of a certain commodity
Disadvantages of trade restrictions
a.) Possible retaliation by other countries
When one country imposes restriction on imports from another country, the other country can also react by similarly imposing restriction on imports from the former country.
b.) Production of low quality commodities
Due to lack of competition the protected industry may end up producing low quality commodities.
c.) High prices for locally produced commodities
Due to their small size the protected infant industry may not enjoy economies of large scale therefore they will have high cost of production.
d.) Less consumer choice
There will be fewer goods and services for consumers to choose from if trade restrictions are put in place leading to low standards of living for such people.
e.) Danger of the need for perpetual protection
The protected infant industries have tendency of remaining young therefore always calling for protection with its inherent problems.
f.) Possible emergence of Monopolies
Protectionism may lead to emergence of monopolies which are always insensitive to customer demands, overcharging and provision of low quality products.
sharon kalunda answered the question on February 22, 2019 at 13:46


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