Advantages And Disadvantages Of Trade Barriers

Trade barriers can be defined as any measures that government or public authorities give to restrict on the flow goods or services. Trade barriers are needed to reduce competitiveness between domestic goods and services, and imported goods and services. But not everything that is restricted or prevented is trade barriers, such as linguistic difference. There are many forms of trade barriers; the most common are tariff and non-tariff barriers. Tariff barriers on trade are tax that was imposed by the government on imported and/or exported goods and services, such as custom duties. According to Cleins C. Coughlin, a senior economist at the Federal Reserve Bank of St. Louis, “non-tariff barriers on trade are non-tax measures imposed by governments

These purposes might be beneficial in the short- run because it will encourage economic growth. Without trade barriers, workers from other countries can easily enter the country and resulting in the increase of unemployment. For example before ASEAN Economic Community (AEC) was placed, ASEAN member labor forces cannot enter Indonesia territory easily. But with AEC that is going to be established, Indonesia workers might be threatened because foreigner might have a higher competence than Indonesia own workers and this may lead Indonesia labor to lose their job and thus, increasing unemployment. But in a long-run, when trade barriers continue, trade barriers will hurt national economy. One problem that emerges from trade barriers is rent seeking. When local industries tried to lobby the government to give them subsidies or increasing tariff rates to gain more profit, there are no additional value added to the total output thus, there will be wasted resources used for lobbying. This is one example of the inefficiency of trade