Question

How does the trade regime present opportunities and challenges for development?

Answer 1

Trade regime is a system in which we encourage local producers with tariffs and non-tariff tax so that they can increase exports and decrease import.

By imposing tariffs on an import, we can discourage those goods. After imposing tariffs, foreign goods will become expensive which will bring the local consumer less consumption and this will give the opportunity to the local producers to produce the goods that the local consumption needs, so with this system we can reduce the import and increase the export and also the government can increase revenue from it.

We have to avoid the challenges of trade regime that can discourage development such as the imports which we have imposed non-tariff if there are plentiful domestic consumers buying them which they will get at very low price which will discourage domestic producers. To avoid them, we have to encourage domestic producers, which will increase development.

if we imposed the tariff of our trad partner country, then it may also happen that it will impose tariff on our exports which may affect our development, so we will have to deal with these challenges too.