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10 International Trade Barriers

10 International Trade Barriers

International trade, in theory, is trade between countries that is conducted on the basis of mutual confidence and mutual profit. However, there are a number of barriers to international trading that you should be aware of; continue reading this article to learn more.

Developing countries, as well as developed countries, engage in international trade. Each country benefits from international commerce by obtaining items that are not produced in their own country.

Geographical conditions, climate, level of scientific and technological mastery, and other factors all influence differences in production results in each country.

As a result of international trade, each country can meet needs that it cannot meet on its own. However, there are still some governments that restrict international trade to safeguard producers that are unable to compete in international trade from going bankrupt.

Apart from that, there are some factors that obstruct international trade that you should be aware of. A country's foreign trade is hampered by the following factors:

1. Currency Differences Between Countries

A country's money is unquestionably distinct. And a currency differential is one of the issues that stifles international trade.

When a country engages in export activities, it is common for the importing country to be asked to pay in the exporting country's currency.

Because the payment will, of course, be tied to the value of the money itself, because if there is a change in capital and the exporting country's total currency value is higher than the importing country's currency value, the importing country's spending will grow.

As a result, it is necessary to establish a currency as an international standard in order for both countries to gain an advantage and make the trade process easier.

Import-export activities will make it easier for your company and business to grow, as well as contribute to the country's advancement. Not only do you need cooperation and a large market to manage a firm, but you also need accurate financial records.

2. A country's security

Because security is such a crucial aspect in the success of international trade, it has a lot of influence when it comes to forming partnerships with other countries. People will be afraid to make transactions if a country is unsafe, and this will be an impediment to international trade against that country.

3. International Trade Policy

Of course, each country has its own economic policies, but these policies are frequently a barrier to international trade. 

For example, one of the barriers to international trade is the existence of policies such as restrictions on the number of imports, high import-export costs, and a lengthy bureaucratic process. It's been a long time since we've seen each other.

And, while each policy has benefits and drawbacks, if the outcomes of these policies become an impediment to international trade for that country, investors will seek out countries that are friendlier.

4. A Variety of Natural Resources

One of the driving forces behind international trade is that each country's natural resources are unique, necessitating imports from other countries to meet their needs. As a result, if the state has a significant involvement in foreign trade.

A country with little natural resources, on the other hand, will not be able to speak loudly in international trade. 

As a result, the presence of natural resources unique to a country will constitute a barrier to international trade from that country.

5. Difficult Payment Process with Big Risk

If there is an international commerce transaction, the amount to be paid is not insignificant, and it is, of course, a substantial sum. Because having to make payments in cash is inconvenient and poses a significant risk.

To mitigate this risk, they frequently make trade payments using L/C, International Clearing, or Telegraphic Transfer. One of these sorts of payments, in particular, takes a long time to complete and can be a stumbling block for international trade.

6. The Declining Level of Welfare of a Country

High unemployment and poverty rates are barriers to international commerce and have a detrimental impact on international trade activity. 

Because of their lack of money, a low level of community welfare will diminish their desire to purchase products or services. As a result, a country's ability to undertake international trade may be hampered.

7. There are Economic Institutions in a Region

An international trade institution or international trade organization is an association that regulates export and import policies between countries. 

However, these inter-state regulations are made so that countries that are members of the organization can benefit and not suffer big losses.

And this regulation can be a limiting factor for international trade for countries that do not join the organization. Because on the other hand it benefits members of the organization but on the other hand it is detrimental to countries that are not members. 

And for example, there are regulations that cause non-member countries of the organization to be subject to a larger import tax on import trading companies.

8. Unstable Currency Exchange

Each country has a different currency with a different exchange rate, the difference in currency exchange rates that is the currency exchange rate. 

Therefore, if the exchange rate is unstable, it will make importers and exporters have difficulty in determining prices, thus having an impact on supply and demand. 

And this is a factor inhibiting international trade, so entrepreneurs are reluctant to export and import with unstable exchange rates.

9. The Occurrence of War

If the occurrence of war can cause relations between countries to be cut off. And besides that, the country's economic conditions will also experience difficulties. So the occurrence of events like this will cause inhibition factors for international trade between countries to be hampered.

10. Anti-Dumping Regulations

The application of this anti-dumping policy is carried out as an effort to protect businesses and industries from the onslaught of cheaper imported goods. If this is allowed, it will endanger domestic and domestic products. This is because the price of imported goods is cheaper than local goods.

And this anti-dumping policy is carried out by increasing the import duty rate on an imported product, so that the price of the product cannot be sold cheaper than the price of local goods. 

The regulation of this policy was also carried out by Indonesia as an effort to suppress goods from China that entered through the free market.

An international trade is needed by all countries including Indonesia in order to have what that country does not have from other countries by trading with other countries.

In carrying out an international trade, of course there is such a thing as profit and loss. 

Therefore, in order to avoid these losses, companies that want to conduct international trade must ensure that the companies they manage have good management, including in terms of finances.

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