Both businesses and governments engage in international trade, provided there are no trade restrictions. Trade restrictions generally prevent companies from doing business with one another in overseas markets. Here are the top 3 barriers to global trade.
Top 3 International Trade Barriers
1) Natural Barriers
Natural trade restrictions may be physical or cultural.
For instance, the price of carrying beef from one country to another can be very high, even if farming beef in the source country may be less expensive. Thus, one of the natural obstacles to international trading is distance.
Another natural barrier to trade is language. Communication barriers may prevent people from establishing trade deals or result in miscommunication, causing the wrong goods to be transported.
2) Trade Barriers
A tariff is a tax a country imposes on imports. It might be a charge per item, like each barrel of oil or per brand-new car; it could also be a percentage of the purchase price, or it could be a combination of both. Regardless of how the tariff is calculated, it could increase the price of imported goods, making them less competitive with domestic goods.
Imported goods are less appealing to consumers than native goods due to protective tariffs. In Canada, import restrictions are generally applicable for items that are regulated under the Export and Imports Permits Act. Foods, plants, Cannabis, animals, and other related products that pose a risk to Canada are considered restricted and prohibited goods.
3) Non-tariff Barriers
In addition to tariffs, governments sometimes employ additional methods to impede commerce. Import quotas, or restrictions on the amount of a specific good that may be imported, are one sort of non-tariff barrier. Quotas are intended to restrict imports to a certain level of a particular product.
An embargo is a complete prohibition on the importation or exportation of a good. Embargoes are frequently implemented for defense purposes.
For instance, some governments have restrictions on the sale of a number of high-tech goods to nations that are not allies, including supercomputers and lasers. This embargo prevents adversaries from utilizing cutting-edge technology in their military systems, despite costing businesses billions of dollars annually in lost sales. Buy-national restrictions are laws that grant domestic manufacturers and retailers particular advantages.
An Overview of the Tariff & Non-Tariff Barriers in Canada
Tariff and non-tariff barriers that companies may face when exporting to Canada include:
– High tariffs, in particular for some products
– Restrictions on selling to the nation’s government
– Licencing requirements for imports
– Measures for anti-dumping and countervailing duties
– Banned products
– Any restrictions on agricultural products
– Foreign nations that forbid involvement in the rule-making process
– Regulations that don’t comply with pertinent international standards
– Technical specifications and required regulations that are excessively restrictive