Trade relations accompany the development of civilization from its earliest stages. At first, everything was quite simple, everything was limited only by the natural exchange of goods for another product. But development went forward, and at the stage of international trade, the question of pursuing trade policy was raised. It is necessary to understand in more detail what its essence is.
Speaking of trade policy in general, it is most often the policy that regulates foreign trade issues. Foreign trade policy implies a set of methods, principles and leverage of the state on foreign trade relations. The most commonly used levers of foreign trade policy are taxes, subsidies, customs duties and trade rules of residents and non-residents of a country.
In practice, trade policy most often affects the export and import of goods. If you look at it from this point of view, you can distinguish several models of foreign trade policy.
The first model is protectionism. It implies the introduction of such rules for the import of goods, which would not allow the entrepreneurs importing them to have economic benefits from its sale in the specified territory. Either excessive duties or direct import bans are established. This policy is applied extremely rarely, since it can entail not only economic tensions in the country, but also foreign policy. Protectionism can have its own varieties. The first variety is selective protectionism, aimed at a specific group of goods or a specific country. The second is industry, the main purpose of which is to protect a particular industry or economy. The third is collective protectionism, which implies the application of protection measures by several countries at the same time. The fourth variety is hidden protectionism, which differs from all others in the absence of the use of customs methods.
The second model of foreign trade policy is a free trade policy. The name speaks for itself. The state completely removes all trade restrictions both within the country and at its customs borders, allowing free flow of goods. The application of such a policy is possible only if there is a developed national economy that would allow entrepreneurs to compete on equal terms with imported goods and services.
The monetarism model holds a special position, according to which the main thing for the country's economy is not the presence of a developed national economy or strong trade relations, but the abundance of money supply in the economy. From the point of view of trade relations, an abundance of funds can be achieved not only through the sale of goods produced in the country, but also through intermediary functions between countries that form the demand and supply for goods and services. Also, a large amount of money in the economy can be achieved through monetary policy and the development of international lending and investment. But we must not forget that an excess of cash will inevitably lead to inflationary processes.
