Question

identify and describe at least 4 instruments of trade policy that a country may use to restrict trade between their country and the rest of the world?

Answer 1

Instruments of trade policy that a country may use to restrict trade between their country and the rest of the world are as follows;

i)Import Quotas:An import quota is a direct restriction on the quantity of a good that is imported.For example,US has a quota on imports of foreign cheese.An import quota always raise the domestic price of imported goods.

ii)Local Content Requirement:It is a regulation that requires that some specified fraction of a final good be produced domestically.Local content laws have been widely used by developing countries trying to shift their manufacturing base from assembly back into intermediate goods.

iii)Red Tape Barriers:Sometimes government place substantial barriers based on health,safety,and custom procedures.

iv)Voluntary Export Restraints(VER):It is a government imposed limit on the quantity of some category of goods that can be exported to a specified category during a specified period of time.