International Trade

Major barriers to international trade- Ari Afilalo

International trade is one of the most vital source of GDP for any countries. Nations from across the world generally engage in overseas trade due to the following reasons:


Distribution of natural resources in an uneven fashion


While there are a few nations that are naturally blessed with even distribution of a wide range of goods, elements, etc., there are many that have scanty or no existence of natural resources. And therefore, it makes international trading a necessity for them.


Differences in climate and environment


The climate and environment varies a great deal on the Earth in nature, season and surroundings. Such a variation in climate leads to growth of a wide range of crops. Therefore, international trade becomes a major necessity for a lot of nations who wish to access crops that are not grown in their type of climate.


Major variations in technology


The standard of technology is a whole lot different from place to place on Earth. Some nations are highly advanced when it comes to technology and can, therefore, manufacture a wide range of products at reduced rates. To access such products, overseas trade is highly important.


Variation in skills


People of certain nation or region can possess different type of specialized skills as they may be required specifically for the production of a certain type of products. This is another clause that necessitate the requirement of foreign trade.


Market expansion for different products


Overseas trade becomes important again when a country intends to expand its reach and visibility for its clientèle.


Together with a long list of factors that necessitate overseas exchange of goods and services, their are numerous barriers or problems that tend to limit international trade. Some of the most prevalent barriers to international trade are listed below:


Language issues


Different issues tend to cut back the growth of international trade. Language is just one of them. Different nationals follow different culture and language that are rarely understood by people from other countries.


Problem of distance


Distance is a major issue in international trade. It takes several days to several weeks, or even months, for a cargo to get shipped from one country to another. This time lag generally delays shipment.


Surplus documentation


Processing of international trade involves too many documents. This creates a delay in processing of international trade, making it cumbersome and lackluster for the most part. The variety of documents may include certificate of origin, ship manifest, bills of exchange, and a lot more.


Difference in currency


Different countries the world over have different sets of currencies. While processing foreign trade, these currencies must be exchanged to process some meaningful transactions. It not only delays the process but even makes it hectic.


About The Author


Ari Afilalo specializes in the business transactions and laws of international trade, elimination of non-tariff barriers to trade, cross border investments and the regulations followed internationally in that order, EU system of judicial remedies.