Role Of Trade Policy

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‘Trade policy’ is a broad term used to explain how international business is regulated globally. Each nation has its own set of laws pertaining to its trade policy. These laws can vary heavily from country to country. In some countries, governments are actively trying to promote an open economy, seeking to remove any barriers to entry in international markets for their home grown businesses while also allowing overseas businesses into their own markets to encourage competition. However in other countries, governments put legislation in place which is highly restrictive on overseas businesses in order to preserve their home grown businesses. In this essay I will define ‘trade policy’ in high detail, discuss the different roles in which governments…show more content…
The main motive of trade policy is to ensure that a nation can trade internationally. Multiple nations can often work together to meet goals and benefit each other regarding imports and exports, whilst also protecting their own national industries (NZ MFAT, n.d.). Trade policy controls things such as tariffs, which are the taxes put on imports, and import quotas, which are limits on how much of a certain good can be imported into a country (NZ MFAT, n.d.). To boost trade, Free Trade Agreements (FTA’s) can be made. FTA’s are agreements between two or more nations which remove tariffs on certain products (NZ Customs Service, n.d.). This ultimately provides international businesses with a larger likelihood to succeed, as they can sell their products for more competitive prices in order to compete with home grown ones, providing less barriers to entry (NZ Customs Service, n.d.). While the most common focus of trade policy is international trade, the use of trade policy differs in many nations and in some instances, trade can be very restrictive. Trade policy plays a vital and important role in ensuring the success of a nation’s economic…show more content…
In my essay, I have given a detailed definition of trade policy and its different aspects; discussed inward and outward oriented trade policy and how these are executed by governments around the world; stated how I believe outward orientation is the most efficient role that government can play in trade policy. In the future, I recommend that governments around the world legislate extremely open policy. Specifically, I believe the New Zealand Government should continue to negotiate as many free trade agreements as possible, as well as continuing to work actively with the World Trade Organization, to help provide a world of open and free
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