Trade Barriers Essay

4559 words - 18 pages

Trade BarriersThe aim of every government in the world is to maximize their wealth, whether this is done to achieve a good standard of living for their people or to make the rich minority even richer is not relevant to this paper. The best and easiest way in which to achieve is to have prosperous national industries. However, in order to allow these national industries to prosper, governments are faced with the dilemma of implementing either protectionist or free trade policies. If they choose to go with the former, then they will have to impose all sorts of import restrictions, while if they choose the latter they must liberalize their markets. As with everything in life there is no black and white solution, as there are advantages and disadvantages to both choices, and there is an array of possibilities between trade policies that completely abides to the rules of free market, and a self sufficient policy where there is almost no interaction with the world market. This paper will aim to look at the different options a government might take in greater detail, as well as how the policies taken can influence the economic growth of a country. More specifically, the paper will focus on the protectionist measures that can be implemented. This will be done by paying particular attention to the two main forms of trade barriers, namely tariff and non-tariff barriers, and the effect which they have on trade.After the Second World War there was a widespread liberalization of the markets, which led to generalized economic growth. There was an unfailing attempt by industrialized nations to try and regulate the international trade system. This was made easier by the emergence of a global system of rules that governed the international market and were embodied by the creation of the General Agreements on Tariff and Trade (GATT). GATT emerged after the Bretton Woods discussions, which had shed light on the common will of Western nations to create an international trade regime. Originally, it was an interim accord, which consisted of a series of non-binding agreements between 23, developed nations and signed in 1947. Its temporary nature stemmed from the fact that they were waiting for the acceptance of the Havana Charter, which was supposed to lead to the creation of the International Trade Organization (ITO). However, the ITO never came about, for although the executive branch of the American governemnet had been a strong advocate of creating a new trading order, the Republican majority in Congress felt that the organization would be detrimental to the economic development of the country, and therefore blocked adhesion to it. This led to America announcing in 1950 that they would not ratify the Charter. Without the support of America the Havana Charter was shelved and the ITO was never established. This meant that the interim agreement, GATT, was left as the sole regulator of international trade. However, GATT faced the problem that its agreements were never...

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