There are a number of things that governments do to restrict international trade. These
restrictions include:
● quotas – a physical limitation on the import of certain goods into a country, sometimes
by mutual agreement (e.g. voluntary export restraints);
● tariffs – a tax placed on imported goods;
● exchange controls – a limit to the amount of a currency that can be bought which
will limit the import of goods;
● subsidies – payments made to domestic producers to reduce their costs and therefore
make them more competitive in world markets;
● qualitative controls – controls on the quality of goods rather than on quantity or
price;
● administrative controls – complicated bureaucratic procedures to discourage
exporters.
All of these serve to restrict international trade and therefore reduce specialisation on a
world level. They invite retaliation and could lead to inefficiencies. Import controls can
have a wide effect on industry. The 200 per cent tariffs that the Americans threatened to
impose on French cheeses and wines at the end of 1992 if the GATT talks were not successful
would have impacted on many other industries like the bottle-making industry
or the insurance industry. But there are powerful arguments used in support of import
controls. For example, they can be used to protect industries, whether these industries
are ‘infant’ industries or strategic industries. In the recent debate within the EU on
bananas, it was argued by the African, Caribbean and Pacific countries who receive preferential
treatment in the European Union (EU) for their bananas that the relaxation of