Which of the following can limit trade?

Which of the following can limit trade?

Question 6 options:

a) Strict enforcement of health and safety laws
b) Allowing a customs system to be inefficient and sluggish
c) A voluntary restraint where a nation voluntarily decreases its exports in an attempt to avoid more restrictive policies
d) All of the above

 

 

answer:

Countries generally use various methods to restrict international trade or more specifically imports into their country.

Since, tariff barriers are becoming difficult to impose due to many international agreements in that respect and also due to WTO, countries resort to non-tariff barriers to restrict imports which in result limit trade.

Some of these are –

1. Imposing strict health and safety standards on imported goods. These standards are more complex and strict for imported goods in comparison to domestically produced goods.

2. Countries also enters into agreement with exporting country where exporting country itself restricts its exports referred to as voluntary export restraint so that importing country do not formulate more restrictive policy.

3. Sometimes importing country creates bureaucratic hurdles as well as put inefficient administrative machinery at good clearance point that is custom system is inefficient and sluggish making trade uncertain and cost of maintaining inventory high.

4. Importing country may also provide subsidies to domestic producers so that they can compete effectively against foreign producers.

Hence, the correct answer is option (d).

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