Reference no: EM131263753
What methods does the government use to restrict trade in Germany?
1.Tariff:
A tariff is a government tax levied on a product as it enters or leaves a country: (1) export tariff, (2) transit tariff, and (3) import tariff.
Tariffs can protect domestic producers because an import tariff raises the cost of imports relative to domestically produced goods.
2. Imports and Export Quotas:
- Import quotas limit the quantity of an import and thereby protect domestic producers and help them to maintain market shares and prices. Import quotas can also force non-domestic firms to compete for market access by lowering prices or by giving other concessions.
- Export quotas boost supplies of a product in a home market, such as when a country blocks the export of a natural resource. Export quotas can also be used to restrict a product's supply on world markets and thereby increase its global price.
3. Embargo:
- An embargo is a complete ban on trade (imports and exports) in one or more products with a particular country.
• It is the most restrictive nontariff trade barrier available and it is often used to achieve political goals.
• An embargo can be imposed by individual nations or by organizations such as the United Nations.
4. Local content requirements:
- Local content requirements are laws stipulating that producers in the domestic market must supply a specified amount of a good or service.
5. Administrative delays:
- Administrative delays are regulatory controls or bureaucratic rules designed to impair the rapid flow of imports into a country. Eg: leather import from newzealand
6. Currency Controls:
• A government can discourage imports by setting an exchange rate that is unfavorable to potential importers.
• On the other hand, it can encourage exports by setting an exchange rate (in dollars system) that is favorable to potential exporters.
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