PPT: The Instruments of Trade Policy | Business Economics for CA Foundation PDF Download

 Page 1


The Instruments of Trade Policy
Page 2


The Instruments of Trade Policy
Developments in India's International Trade Strategy:
India shifted from avoiding FTAs to actively 
pursuing them, aiming to become globally FTA-
engaged.
This renewed focus began with Mauritius (April 
2021), followed by fast-track negotiations with 
UAE, Australia, UK, Canada, and EU.
Key agreements include CEPA with UAE (February 
2022) and ECTA with Australia (April 2022).
Upcoming FTAs with UK, Canada, EU, and Gulf 
Cooperation Council are in progress.
Page 3


The Instruments of Trade Policy
Developments in India's International Trade Strategy:
India shifted from avoiding FTAs to actively 
pursuing them, aiming to become globally FTA-
engaged.
This renewed focus began with Mauritius (April 
2021), followed by fast-track negotiations with 
UAE, Australia, UK, Canada, and EU.
Key agreements include CEPA with UAE (February 
2022) and ECTA with Australia (April 2022).
Upcoming FTAs with UK, Canada, EU, and Gulf 
Cooperation Council are in progress.
Trade Concepts
Free Trade
Minimal state interference in trade, allowing 
market forces to determine prices.
Protectionism
State policy protecting domestic producers from 
foreign competition through tariffs and quotas.
Page 4


The Instruments of Trade Policy
Developments in India's International Trade Strategy:
India shifted from avoiding FTAs to actively 
pursuing them, aiming to become globally FTA-
engaged.
This renewed focus began with Mauritius (April 
2021), followed by fast-track negotiations with 
UAE, Australia, UK, Canada, and EU.
Key agreements include CEPA with UAE (February 
2022) and ECTA with Australia (April 2022).
Upcoming FTAs with UK, Canada, EU, and Gulf 
Cooperation Council are in progress.
Trade Concepts
Free Trade
Minimal state interference in trade, allowing 
market forces to determine prices.
Protectionism
State policy protecting domestic producers from 
foreign competition through tariffs and quotas.
Benefits and Challenges of Trade
Benefits
Economic growth
Job creation
Improved welfare
Trade is associated with efficiency benefits in 
terms of economic growth, job creation, and 
welfare.
Challenges
Unfair competition
Domestic disruption
Adjustment difficulties
Unobstructed international trade can cause 
significant disruption to domestic firms and 
industries due to adjustment challenges.
Trade policy includes all tools that governments use to promote or restrict imports and exports, 
classified into:
1
Price-related measures
Such as tariffs
2
Non-price measures
Also known as non-tariff measures (NTMs)
Page 5


The Instruments of Trade Policy
Developments in India's International Trade Strategy:
India shifted from avoiding FTAs to actively 
pursuing them, aiming to become globally FTA-
engaged.
This renewed focus began with Mauritius (April 
2021), followed by fast-track negotiations with 
UAE, Australia, UK, Canada, and EU.
Key agreements include CEPA with UAE (February 
2022) and ECTA with Australia (April 2022).
Upcoming FTAs with UK, Canada, EU, and Gulf 
Cooperation Council are in progress.
Trade Concepts
Free Trade
Minimal state interference in trade, allowing 
market forces to determine prices.
Protectionism
State policy protecting domestic producers from 
foreign competition through tariffs and quotas.
Benefits and Challenges of Trade
Benefits
Economic growth
Job creation
Improved welfare
Trade is associated with efficiency benefits in 
terms of economic growth, job creation, and 
welfare.
Challenges
Unfair competition
Domestic disruption
Adjustment difficulties
Unobstructed international trade can cause 
significant disruption to domestic firms and 
industries due to adjustment challenges.
Trade policy includes all tools that governments use to promote or restrict imports and exports, 
classified into:
1
Price-related measures
Such as tariffs
2
Non-price measures
Also known as non-tariff measures (NTMs)
T a r i f f s
Tariffs, often referred to as customs duties, are essentially taxes imposed on goods 
and services that are imported or exported.
What are Tariffs?
Taxes imposed on goods and services when they cross borders, with different rates 
for different items specified in a tariff schedule.
Import vs Export Duties
Import duties are more common and are often what people mean when they refer to 
tariffs.
Purpose of Tariffs
To adjust relative prices of imported goods, generate government revenue, and 
protect domestic industries.