Trade Policy

Trade policy, also known as international trade policy or commercial policy outlines standards, regulations, rules and goals governing trade between countries. International trade has been fueled by the rise of globalization and increase in foreign trade. Trade policies vary in dimensions, scope of coverage and the constituent members. They are specific to certain country, region or trade union and are usually formulated to suit their members, hence the categorization of the trade policies into three types; international trade policy, national trade policy and bilateral trade policy. The international trade policy covers the trade relations between different countries across the globe, developed and developing countries. For example, the World Trade Organization, the Organization for Economic Co-operation and Development and the International Monetary Fund are international organizations that foresee fair and controlled economic relations between countries. Bilateral trade policies are formulated to govern trading activities between two trading nations while the national trade policies only govern the trade activities within a particular country as well as protecting the interests of its citizens.

Trade policies are comprised of trade barriers, tariffs and safety. Safety is ensured through a thorough quality assurance process and measures to ascertain that only high quality products are imported. Tariffs comprise of taxes imposed on the imports and exports and finally the trade barriers are imposed to control trading with a certain country or product. They can be in form of quotas, duties, subsidies, tariffs or embargoes (Hertel & Hertel, 1997).

Several key questions on trade policy often arise in the course of a student’s economics course work. These include; how effective are trade policies at national, bilateral and international level? , From a global perspective, which sectors have more strict trade policies and why? , why and how have the trade policies changed over time? , Is there evidence of discrimination against certain countries during the formulation of trade policies? , Can the world trade be described as liberal? , what are the recommendations towards formulation of effective trade policies in line with the rise of globalization?

These questions are likely to come up during the student’s homework and assignments and require accurate consideration into the contemporary trends in the global economies. The major factors of consideration when tackling these questions include; the context of the question, the scope of coverage- whether national, bilateral or international, the trending issues on the subject and finally the level of diversity of the study subject.