Question

In a critical essay, evaluate trade barriers. Why do countries impose trade barriers? What is the effect of trade barriers on the trade balance, the employment, and the economic growth?

Now choose a country (other than Saudi Arabia) and evaluate the arguments for and against erecting trade barriers in your chosen country.

Answer 1

A trade barrier is defined as any hurdle impediment or roadblock that hampers the smooth flow of goods services and payments from one destination to another. They arise from the rules and regulations governing trade either from home country or host country or intermediary. Trade barriers are man made obstacles to the free movement of goods between countries and impose artificial restrictions on trading activities between countries. Trade barriers are government policies which place restrictions on international trade stop trade barriers can either make trade more difficult and expensive or prevents trade completely fullstop trade barriers are goverment induced restrictions on international trade. Most trade barriers work on the same principle the imposition of some sort of cost on trade that raises the price of the traded products. If two or more Nations repeatedly use trade barriers against each other then a trade war results. generally government imposes barriers to protect domestic industry or to punish A trading partner. Trade barriers such as taxes on food imports or subsidies for farmers in developed economies lead over production and dumping on world markets were thus lowering prices and hurting poor country farmers. The effect of trade barriers such as tariffs raises prices and reduce available quantities of goods and services for businesses and consumers, which results in lower income, reduced employment, and lower economic output. The effects of each thariff will be lower GDP, wages, and employment in the long run. Even if trade does not reduce the number of jobs it could affect wages. Workers in industries that are confronted by a competition from imported products may find that demand for their labour decreases and shifts back to the left so that their ways decline with a rise in international trade. economics generally agree that trade barriers are detrimental and decrease overall economic efficiency. This can be explained by the theory of comparative advantage. In theory free trade involves the removal of all such barriers except perhaps those considered necessary for health or national security. In practice however even those countries promoting for free trade heavily subsidized certain industries,such as agriculture and steel. Trade barriers are often criticized for the effect they have on the developing world. Because rich country player set trade policies, goods such as agricultural products that developing countries are best at producing, face high barriers.

TRADE BARRIERS IN NIGERIA

The forums research shows that a range of companies operating in Nigeria considers the environment not conducive to business. Among four categories of trade barriers, the most commonly mentioned are lack of transport infrastructure and inefficiency and optimacy in border administration. Other obstacles include barriers to market access, such as Import prohibitions, local content requirements and import export licensing regulations that are designed to provide price protection to local manufacturers from lower quality imports the overall business environment also poses challenges. A generally poor security situation makes it difficult to keep staff, is specially expatriates safe and prevent theft of finished goods and valuable assets. Delays at Nigeria's ports and are caused by inefficient border administration and same to stem from general mismanagement and developed transport infrastructure corruption. Business operators consistently complain about dealing with too many government agencies , ,arbitrary face requested by some government officials, illegal clearing agents at the ports and poor infrastructure. Trade barriers are often seen as a reddress to the social and economic cost of trade or as a way of enhancing economic advantages. however in most cases economists argues that erecting barriers on trade imposes cost on the economy that exceed the benefit of trade. These costs can arise from insufficient resource allocation interactable implementation and foreign retaliation. To determine the nature of relationship that exist between trade barriers and economic growth in Nigeria. To investigate if trade barriers actually lead to economic growth in Nigeria.

Arguments for trade barriers:

Most often some arguments have been advanced on the need for a country to erect a barrier for free flow of trade and arguments are briefly discussed below:

1)infants industry argument: infant industry is an underdeveloped industry which may not be able to survive competition from abroad. The argument is that which industry should be shielded temporarily with the high tariff or quotas until they develop technological efficiency, economy of scale which will enable them to compete with foreign industries.

2)National security argument: This argument content that a nation should be as self-sufficient as possible in the production of goods needed for war and defence. On the face of it this pea for protection seems persuasive but on closer examination one will easily discover that it is political and military argument rather than economic one.

3) Diversified economic argument : According to diversified economy theorist a nation should not put all her eeg in one basket they contend that increase production is desirable because it enables a nation to build up a variety of industries for greater economic stability. A single product economy as high valuable to swings in demand which may be permanent however the inefficiencies that made result from forced and natural diversification and consequent increase in cost which will more than offset set any economic gain was overlooked by the theorist.

4) wage protection argument:

Advocates of this argument contents that a high wage nation needed tariff or quotas to protect their workers from the products of cheap labour abroad. In essence, they are saying that a high wages nation cannot compete with the lower wage nation. The inherent problem with this argument is that it is assumed that labour is the only resource that is entering into production.

5) Employment protection argument: Supporters of trade barriers often argued that tariffs for quotas are desirable because they reduce import relative to exports and thus encourage a favourable balance of trade. This in turn stimulates the export industries and help to bring about a higher level of domestic income,employment and production.

Arguments against international trade:

capital markets involve the raising and investing money in various enterprises. Although some argue that the increasing integration of this financial markets between countries leads to more consistent and seamless trading practices, others point out that capital flows tend to favour the capital owners more than any other group. likewise owners and workers in specific factors in capital exporting countries bear much of the burden of adjusting to increased movement of capital. The economic strains and eventual and hardships that results from the conditions leds to political division about whether or not to encourage or increase integration and of international Trade markets.moreover, critics argue that income disparities between the rich and poor are exacerbated and industrialized Nations grow in power at the expense of under capitalised countries.