Impediments To International Trade

IMPEDIMENTS TO INTERNATIONAL TRADE Submitted to: Prof. Raysam Submitted by: Ashini Mody 08BS0001751

Eventhough, International Trade is doing very well these days, there lies a challenge at every step. With increase in competition, international trade is subjected to many challenges. Challenge of international trade may be psychological, infrastructural, and physical. The challenge of international trade and other associated information and guidelines are usually made known in the trade policies. The above mentioned three challenges affect the economy at the enterprise and micro levels. In addition to the trade associated challenges in international trade, a new challenge, which is lurking large, and had practically devastated the United States of America, is the fight against terrorism. After the terrorist attacks on the World Trade Center, there was global economic slowdown. International trade suffered massively. There were tremendous fluctuations in the exchange rates. Starting from anthrax attacks to the terrorist attacks on Sept 11th, the trade scenario worldwide has changed dramatically since then. It is argued that International Trade adversely affects wages, particularly when trade takes place between two countries in one of which wages are very low and in the other very high. Like the trade between countries like America and China or Japan.

Certain Arguments against International Trade Some of the arguments advanced against international trade include the following:  A country which depends on imports is in a vulnerable position during war. 

International Trade become a reason for economic instability and result into conflicts with economic planning.

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International Trade inflicts harm on those home industries whose prduct are displaced by the imports.

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It implied dependence on foreign markets as sources of supply and as outlets for domestic production. Some people felt dependence to be dangerous. They felt to reduce such dependence or entirely eradicated.

Hindrances Faced International trade involves many countries. Every country is expected to abide by certain norms, which govern the logistics in international trade. The economic condition, political make up of a particular nation is never constant. In the event of an unforeseen event, taking place in any country, the trading partners are also affected to a great extent.  National Defence If a nation is depended on foreign sources of supply is in a woeful situation during war. Taking the experience of England world war is a cited proof, in which the blockade of England by German submarines had brought England to their knees by cutting off imports of food and essential raw materials.

 Instability and Economic Planning In 1930s when the Great Depression spread from one country to another by disrupting the international flow of goods, services and capital. Today the argument against international trade has been reinforced by government policies directed toward achieving full employment and economic growth. Most nations are unable to achieve the objectives of full employment and growth as members of an in international trading system.  Production Attacks on international trade have been directed against imports. There is always a risk for the protection of domestic industry against foreign competition. It also affects national security, economic stability, employment, protectionism and others.  Non Tariff Barriers There are certain restrictions such as Quantitative Restrictions, Voluntary Export Restraint (VER), Licensing and Administered Protection. Quotas are aimed at reducing the quantity of imports/exports in order to protect the interests of domestic producers or to conserve foreign exchange. There are certain chances for misusing the liberalization.  Other Barriers There are also other common barriers which are faced by all nations like Language Barrier, Political Barrier, Infrastructure Barriers, Currency Barriers which becomes impediments to International Trade. It also affects Growth of the country which affects their GDP and also relationship between two countries. In order to overcome the challenges faced by the international trade market, several measures can be adopted. With regard to shipments, export and import of commodities, if the shipment can be traced in real time, loss worth several million

dollars can be prevented.