barriers to trade

+ Barriers to trade Impact (aggregate supply/aggregate demand) and then explain the impact on GDP, unemployment, etc. 1. Tariffs - a tax or duty that raises the price of imported products and causes a contraction in domestic demand and an expansion in domestic supply. For example, the United States has an 11% import tariff on imports of bicycles from the UK. 2. Quotas - these are quantitative (volume) limits on the level of imports allowed or a limit to the value of imports permitted into a country in a given time period. Until 2014, South Korea maintained strict quotas on imported rice. It has now replaced an annual import quota with import tariffs designed to protect South Korean rice farmers. Quotas do not normally bring in any tax revenue for the governmente 3. Intellectual property laws e.g. patents and copyright protection 4. Preferential state procurement policies - this is where government favours local/domestic producers when finalizing contracts for state spending e.g. infrastructure projects or purchasing new defence equipment 5. Export subsidies - a payment to encourage domestic production by lowering their costs. Soft loans can be used to fund the dumping of products in overseas markets. Well known subsidies include Common Agricultural Policy in the EU, or cotton subsidies for US farmers and farm subsidies introduced by countries such as Russia." 6. Domestic subsidies - government help (state aid) for domestic businesses facing financial problems e.g. subsidies for car manufacturers or loss-making airlines. 7. Exchange controls - limiting the foreign exchange that can move between countries