FOREIGN TRADE BARRIERS FAST FACTS UNDERSTANDING AND OVERCOMING RESTRICTIONS

Overview industry from foreign competition. Finally, countries often A trade barrier is generally any government-induced use barriers as tools of foreign policy. Very high or low restriction that makes trade difficult or even impossible. tariffs can be used to reward or punish other nations in Trade barriers have a negative effect on exporters support of foreign policy initiatives. This is the premise because they interfere with normal supply and demand of most free trade agreements, embargoes, boycotts and and make international trade more complicated. They sanctions. For all of these reasons, trade barriers are also negatively impact importers, and ultimately sensitive and controversial issues. consumers, since they interfere with competitive According to the U.S. government, some of the most sourcing, which can result in higher prices. common trade barriers affecting U.S. companies include: The global trend in recent years has been to eliminate • Tariffs, quotas, import licenses, fees and paperwork as many trade barriers as possible. Organizations like requirements, and customs barriers that are not the World Trade Organization have been established with uniformly applied the purpose of limiting barriers and reconciling trade • Lack of competitive bidding on government tenders disputes among member nations. Free trade agreements such as the North American Free Trade Agreement • Burdensome standards, testing, labeling and (NAFTA), as well as those among the Association of certification requirements not required of domestic Southeast Asian Nations (ASEAN) and the European manufacturers Union customs union, have reduced the number of • Direct or indirect subsidies by a foreign government barriers involved in regional trade. in favor of domestic suppliers Trade barriers are as ancient as trade itself, and there • Export controls such as license requirements and are many reasons countries impose trade barriers. Trade restricted buyer lists barriers initially arose in the form of tariffs levied to • Intellectual property infringement, including copyright, generate revenue. For many countries, tariffs are a major patent and trademarks source of income and are critical to the national economy. Tariffs, quotas and non-tariff barriers such as excessive • Influence peddling - company/government interference regulations are now commonly used to protect domestic • Bribery, corruption and requests for payoffs

Resources The U.S. federal government has programs to assist U.S. What to Do About Trade Barriers? companies if they have difficulties exporting. The mission If you are faced with an official barrier, such as of the U.S. Department of Commerce’s Office of Trade an overwhelming tariff, restrictive regulations or Agreements Negotiations and Compliance (TANC) is government subsidies, there are remedies available. to ensure foreign compliance with trade agreements.

For more information, please contact Chad Hoffman, international market development director, at [email protected] or 608.210.6890.