Trade Policy Instrument

A Trade Policy Instrument is a policy instrument that regulates international trade flows to achieve trade policy objectives through border measures or domestic regulations.

• AKA: Commercial Policy Tool, Trade Regulation Instrument, Import-Export Control, Trade Intervention Mechanism.
• Context:
  • It can typically control Import Volume through restrictive measures.
  • It can typically promote Export Competitiveness via support mechanisms.
  • It can typically protect Domestic Industry from foreign competition.
  • It can typically generate Government Revenue through customs duties.
  • It can typically enforce Trade Agreement Obligations through implementation rules.
  • ...
  • It can often create Trade Diversion from efficient suppliers.
  • It can often trigger Retaliatory Measures from trading partners.
  • It can often require Customs Administration for enforcement.
  • It can often affect Consumer Welfare through price impacts.
  • ...
  • It can range from being a Tariff Trade Policy Instrument to being a Non-Tariff Trade Policy Instrument, depending on its implementation mechanism.
  • It can range from being a Transparent Trade Policy Instrument to being an Opaque Trade Policy Instrument, depending on its visibility level.
  • ...
  • It can impose Import Duties on foreign goods.
  • It can establish Quota Systems for quantity restrictions.
  • It can implement Technical Barriers through product standards.
  • It can provide Export Subsidies for market penetration.
  • It can enforce Anti-Dumping Measures against unfair pricing.
  • ...
• Example(s):
  • Tariff Instruments, such as:
    • Ad Valorem Tariff based on product value.
    • Specific Tariff based on physical units.
    • Compound Tariff combining value and quantity bases.
  • Quantitative Restrictions, such as:
    • Import Quota limiting import quantity.
    • Voluntary Export Restraint restricting export volume.
    • Import Licensing System controlling import permissions.
  • Technical Trade Policy Instruments, such as:
    • Sanitary and Phytosanitary Measure for health protection.
    • Technical Barriers to Trade for standard compliance.
    • Rules of Origin for preferential treatment.
  • Trade Remedy Instruments, such as:
    • Anti-Dumping Duty against price discrimination.
    • Countervailing Duty against foreign subsidies.
    • Safeguard Measure for emergency protection.
  • ...
• Counter-Example(s):
  • Domestic Tax Policy, which applies equally to domestic and foreign products.
  • Competition Policy, which regulates market behavior rather than trade flows.
  • Investment Policy Instrument, which governs capital movement rather than goods trade.
• See: Policy Instrument, Trade Policy, WTO Agreement, Customs Regulation, Trade Protection Measure, Trade Liberalization Tool, Regional Trade Agreement Provision.

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