A
trade barrier is general term that describes any government restriction on
international trade, the barriers can take many forms, including:
Most trade barriers work on the same principle: the imposition of some sort of
cost on trade that raises the price of the traded
products. If two or more nations repeatedly use trade barriers against each other, then a
trade war results.
Economists generally agree that trade barriers are detrimental and decrease overall
economic efficiency, this can be explained by the
theory of comparative advantage. In theory,
free trade involves the removal of all such barriers, except perhaps those considered necessary for health or national security. In practice, however, even those countries promoting free trade heavily subsidize certain industries, such as
agriculture and
steel. Examples of free trade areas are:
North American Free Trade Agreement (NAFTA),
European Free Trade Association,
European Union (EU),
South American Community of Nations.
See also
Category:International trade
category:International economics