The methods used to regulate international trade

The methods used to regulate international trade

  • Imposing tariffs, high taxes on imports raises their prices hence discouraging their consumption in the local market. High export taxes may also be imposed to discourage exportation of essential items.
    • Fixing quotas, the government fixes a physical restriction in the amount of goods that should be imported. The maximum quantity set over a given period of time is not exceeded hence any excess is rejected.

    • Use of devaluation, this involves a reduction in the value of local currency in relation to foreign currency. This policy makes imports expensive hence discouraging their importation.
    • Use of subsidization, the government gives financial assistance to the local producers to keep their cost of production low hence having a price advantage over the imports. This will discourage imports.
    • Use of foreign exchange control, the government may restrict the foreign exchange given to the importers or may fix it at a high rate to make importation expensive. This will at the end discourage imports.

    • Issuing import licenses, the government charges high license fees from importers or issues few licenses to importers hence limiting imports.
    • Total ban, the government completely prohibits importation of certain items by law. This is mainly done to commodities that are deemed dangerous to the citizens in the country.
    • Introduction of sanitary regulations, the government introduces strict health standards that are supposed to be met by importers before allowing their goods into the local market. This discourages importers of products which do not meet the required standards.
    • Use of administrative controls, the government put in place lengthy procedures to be complied with before one is allowed to import or it may put in place technical specifications that are to be complied with by the importers.

  • Use of import prepayments, the government may require the importer to deposit import fees in advance before allowed to import. This may discourage some importers who could not meet this requirement.


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