Trade and Trade Barriers Basics Essay

Submitted By Basir1
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(policy barriers (tariffs and regulations).

tariffs continue to cause problems for companies, large and small, that wish to access foreign markets.
Because of their size, SMEs are in a vulnerable position in relation to trade barriers, which discourages internationalisation.
(Overcoming trade barriers requires significant investment in both time and resources.- As a result, an
SME may be unable or unwilling to fully engage and take advantage of available government consultation mechanisms and strategies for dealing with barriers in foreign markets, such as engaging trading partners in negotiations, launching legal proceedings or pursuing trade advocacy.)
-import tariffs continue to cause problems for companies that wish to access foreign markets.
-concerns about protection of intellectual property focus usually on specific markets, most often developing and transition economies where insufficient measures are taken to assure the protection of designs and models (Russia and China are mentioned in OECD/APEC survey)
-There is also some evidence that foreign-owned firms that seek to obtain patents in foreign markets face greater administrative delays than domestic firms, and that additional administrative delays differ across countries.13 See Pierre M. Regibeau and Katherine E. Rockett (2006), Administrative delays as barriers to trade,
Contributions to Economic Analysis & Policy, Vol. 5, No. 1, Article 27.

Box 1. Certification requirements in EU market perceived as costly and burdensome
A manufacturer of meat products located in an EU country reports having difficulty exporting meat products.
Authorities in the export market, which is also a member of EU, do not accept the certificates of fulfillment of sanitary regulations for food products obtained in the home country of the exporting firm. As a consequence, the firm is required to utilise the inspection service in the host country, which is annual and costs about €1,200 plus additional charges. Also, the authorities in the export market require a label in only one language, although the company labels in four.
A SME that manufactures sound instruments exports 80-85% of its product to Europe and the United States.
According to the firm, despite the fact that European Directives cover all products manufactured by this firm these have to undergo different national certification procedures. The tests are mandatory and each costs about €14,000-
18,000 for every new product, plus yearly inspection fees.
More generally, an interview-based survey of some 200 mostly manufacturing companies, two thirds of which had less than 250 employees, asked, inter alia, what types of barriers these firms continued to meet in their daily business in the single market:
11 companies reported they had to meet mandatory national requirements that resulted in product changes
92 reported they had to meet requirements for extra national testing/certification of products
34 reported meeting other requirements, such as extra or different documentation.
Overall, 65 of the 200 companies felt that the Internal Market had led to more regulation, due to detailed documentation requirements, national requirements remaining and increasing in parallel with EU regulations, different interpretation of regulation and new EU regulation in areas not previously regulated (e.g. environment).
Source: “It’s the Internal Market, stupid! A company survey on trade barriers in the European Union”, UNICE 2004.
3. Less direct and visible “procedural” barriers can, by themselves, influence market access significantly
16. Because they are less direct and often not visible, procedural barriers to trade are difficult to document and to remove. They can take many different forms, depending on the area of trade policy. It can be policy implementation procedures, the attitudes and behaviour of regulatory authorities and public officials, poor administrative practices promoting