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Trade Barriers

Trade barriers refer to restrictions on trade between nations. The most commontypes of trade barriers are subsidies, tariffs, quotas, duties, and embargoes. Whilefree trade is about the theoretical removal of all trade barriers, allowing for completely

free and unfettered trade. In practice, however, no nation fully embraces free trade,as all nations utilize some assortment of trade barriers for their own benefit.

Trade Barriers in Asia

A. Central Asia

The countries that are part of Central Asia are: Kazakhstan, Kyrgyzstan,Tajikistan, Turkmenistan , Uzbekistan, Mongolia, Afghanistan, Northern andwestern Pakistan, Northeastern Iran, Jammu and Kashmi, Southern Siberia.These countries are experiencing deficits and problems regarding trading with

other countries because of the presence of trade barriers.

One of the trade barriers in Central Asia is that changes in tariff schedules arerather frequent and unpredictable. In addition to this, escalation of tariffs is alsoprevalent in Azerbaijan, Kazakhstan, and Uzbekistan which discourages othercountries to do trade with these countries.

B. East Asia

C. South Asia

The importance of tariffs as barriers to trade has gradually declined in SouthAsia. However, high tariffs still exist for certain sensitive products, and there is astrong presence of nontariff barriers (NTBs) including high border transactioncosts in the region. In particular, high transportation costs act as a seriousconstraint to enhancing merchandise trade flow in the region.

A number of studies have shown that the economies with close geographical

location could potentially benefit substantially from higher trade, provided tradeand transport barriers are removed through a regional transit arrangement.

One of the critical factors preventing South Asia from achieving its fullpotential in terms of international trade is the absence of regional transit trade.South Asian countries do not have a regional transit arrangement, unlikeEuropean unions. Though some landlocked countries such as Afghanistan,Bhutan and Nepal have a partial transit.

In order to lessen regional and international trade transportation costs, South

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Asian countries have been trying to connect the region through improvedregional transit agreement. But this is not easy due to numerous challenges thatthese countries are already facing.

As mentioned, Afghanistan, Bhutan and Nepal are landlocked countries anddepend solely on transit through neighboring countries. They are confronted witha number of constraints that increase the logistics costs of their internationaltrade. Landlocked developing countries, as a group, are among the poorest ofdeveloping countries, with limited capacities and dependence on a very limitednumber of commodities for their export earnings.

Lack of territorial access to sea- ports, remoteness and isolation from worldmarkets have contributed to their poverty, substantially inflating transportation

costs and lowering their effective participation in international. For example,Bhutan and Nepal rely heavily on Indias eastern coast for their internationaltrade. Due to several blockages, including those visible at border-crossingcorridors and transit ports, Bhutan and Nepal face substantial trade costs, whichotherwise could be avoided if a regional transit trade regime is restored in SouthAsia. Most, if not all, landlocked countries in South Asia are exporters ofcommodity. The very high transport costs that they must bear constraints exportdevelopment since that burden limits the range of potential exports and marketsin which goods can be traded. Due to this, the price of imports tends to increasebecause of high transit transportation costs.

In addition, poor institutions (for example, lack of e-filing of tradedocuments), inadequate infrastructure (for example, lack of a modern warehouseor container handling facility at border), and the absence of a regional transittrade (virtually in the entire region) are prohibiting the growth of trade in SouthAsia.

D.