Which Type Of Trade Barrier Is Explicitly Used For Political Purposes?

Which Type Of Trade Barrier Is Explicitly Used For Political Purposes?

A. Standards

B. Quotas

C. Tariffs

D. Embargoes

Answer:- D. Embargoes

A trade embargo is the most severe form of trade barrier used by nations to limit the trading capabilities & cripple the economy of a country. Trade embargoes are major economic sanctions and have been used frequently by countries to suppress opposing political entities or impose a certain political agenda. They are generally enforced between warring nations.

Tariffs are the most common type of trade barriers employed during peacetime.

There's a close connection between the economy and politics. That is why trade barriers are such exceptionally powerful tools in world politics. Trade barriers such as embargoes and economic sanctions can stall any economy by throttling the flow of international goods & services in & out of a country.

Let’s dig in a bit deeper to understand the motivations & repercussions of these severe trade barriers.

What is a Trade Embargo?

The sustainability of a country's economy depends heavily upon its ability to trade with others. Imports and exports are crucial for keeping any socioeconomic machinery operational and ensuring stability. Developing economies such as India, China, Saudi Arabia, etc., depend heavily upon international trade to keep themselves up & running. Conducive political relationships with economic superpowers are critical for any fledgling or fast-accelerating economy.

Embargoes are severe economic sanctions that are hindrances to international trade that a political superpower can impose on an international trading partner. Embargoes are direct barriers to trade as they are generally political agreements or outright blockades that target a particular nation.

Trade embargoes severely limit the ability of a country to import or export. The strictest form of economic sanction, embargoes are generally imposed on aggressors during wartime. It is exceptionally difficult to enforce unfair trade embargoes as the resulting repercussions generally have a devastating domino effect on the world economy & the enforcer as well.

Tariffs and subsidies are other commonly implemented trade barriers frequently used to push or impose political agenda implicitly.

Tariffs and Subsidies As Trade Barriers

Both tariffs and subsidies are implemented through domestic policies & act as indirect barriers to international trade.

• Tarif are taxes imposed on imported goods or foreign services. The higher the tariff on an imported entity, the more difficult it is for domestic businesses and individuals to avail of them.

This affects the trade that foreign businesses can do with the tariff-inducing country.

• Subsidies are discounts levied upon domestic businesses and sectors. Government subsidies bring down the prices of domestic goods in a particular sector, thereby boosting its sales. This simultaneously reduces the number of imports of that particular good or service.

Both tariffs and subsidies are barriers to seamless trade between nations as they reduce the level of import and export. They raise the price of imported goods compared to domestic goods, affecting the exporter negatively.

Trade barriers and economic sanctions such as embargoes, tariffs, & subsidies are considered protections against predatory trading practices & have often been used to shield domestic producers. Yet, given the close and intricate connection between economy and polity, numerous political superpowers have used trade sanctions as a tool of political oppression.

The Politics Behind Economic Sanctions & Trade Barriers

Like wars, sanctions and trade barriers are also incredibly powerful political instruments. Economic sanctions have, time and again, been used to further political agendas and bring dissidents in line.

The ethics of economic sanctions become chaotic and ineffective when it comes to economic superpowers. Have trade embargoes, tariffs, and sanctions been major features of international relations?

• The United Nations Security Council have imposed strict trade barriers on countries like Iraq, the former Yugoslav Republics, Haiti, and any major dictatorial power.

Though enforced by the UN Security Council, such strict economic sanctions are considered politically motivated. The economic sanctions imposed on Iraq in 1990 were supposedly done as a punishment for its invasion of neighbouring Kuwait. The sanctions, coupled with the Gulf War, devastated the country's economy and killed 500,000 children.

• The United States of America became a dominant economic power following the Second World War. Since then, the dollar has become the dominant international currency and exerts extraordinary influence on all aspects of international trade.

Iraq, Russia, Cuba, China, Libya, Syria, and North Korea are some major countries that have seen their international trade stifled due to economic sanctions from the US.

Russia is the latest to feel the wrath of economic sanctions, not just from the US but from its NATO allies and the EU. However, trade barriers on Russia, one of the biggest players in the world economy, have drastically affected the global economy.

• The Council of Foreign Relations also highlight how trade barriers and economic sanctions have been used throughout history to cripple economies & force changes in policies and even ideologies. Supporters of economic sanctions cite their effectiveness as powerful foreign policy tools. Critics highlight the misuse of trade sanctions to bring out political upheavals.

• Regime changes are the primary objectives of major economic sanction policies. They are the only remaining effective alternative to outright wars when it comes to bringing pressure on oppressive regimes. History witnesses debilitating economic sanctions on totalitarian regimes that violate the basic humanitarian tenets.

At the same time, trade barriers can be considered tools to influence a country's politics.

In Conclusion

Experts and scholars across multiple schools of thought concur on the detrimental impact of trade barriers on international trade. In this era of globalization, trade barriers, such as embargoes & onerous tariffs and subsidies, do more harm than good. Trade barriers are exceptionally harmful to developing economies. When economic superpowers impose embargoes on smaller nations or implement tariffs & subsidies on products such as agricultural produce, it damages developing and smaller-scale economies.

Countries should be careful when using tariff or non-tariff-based barriers as political manipulation tools. The economic impact of such sanctions can resonate across the global economy and, in this age of globalization, can even destabilize it.

FAQs

Q.1: What are trade barriers?

Ans.: Trade barriers are economic sanctions and restrictions governments impose to curtail trade and throttle the targeted nation's economy.

Q.2: How are trade barriers used as political tools?

Ans.: Given the criticality of foreign trade for any economy, trade barriers have a direct impact on economic stability and have been used, time and again, as a tool for furthering political agenda and inciting unrest.

Q.3: What are the differences between tariff and non-tariff trade barriers?

Ans.: Tariff-based trade barriers involve taxes and discounts imposed on imported goods and domestic produce. These affect foreign trade by making it costly to import and cheaper to buy domestic products.

Non-tariff trade barriers involve severe sanctions such as trade embargoes, blockades, currency devaluation, and protectionist and non-protectionist policies.

Q.4: Give an example of trade embargoes in reality.

Ans.: The most current and prominent example of a trade embargo is the US and NATO trade embargo imposed on the Russian Federation after its aggression against the Republic of Ukraine.