Tarrif_Barriers

XXX Professor Daly International Marketing 58010 January, 24 2011 Assignment A: Tariff Barriers There are two different types of barriers in the export and import area: the tariff and the non-tariff barriers. The non-tariff barriers limit the import of some specific products by founded quotas or quality standards that a foreign companies should respect to launch a product. An international organization: the World Trade Organization has been created in order to regulate and control those barriers. The principal goal of those types of barriers is to protect and encourage the domestic production and on the other hand to increase their incomes. Although there are positive impacts on the country which import a product, there are also some negative impacts on the international business because it asks investments; consequently, it is difficult for small companies to compete in these markets. To illustrate a non-tariff barrier, the CE norm is a good example because it is a quality standard require on a huge number of different products such as toys or sun-glace. Barriers are a solution for countries to limit the import of specific products. There are different types of barriers like tariff and non-tariff barriers that are a special goal. First of all, the tariff barriers can be defined as taxes apply to import products. Governments add taxes the import products in order to support the local products. Moreover, the impact on the country revenue is high as well. Indeed, it increases the country Growth Domestic Product. The non-tariff barriers are all the rules or country polices, like norms, quotas, quality standard, import license … that a company has to respect or follow before launching its products on a new market. Despite the fact that the goal is the same that the tariff barriers, this type of limits have no consequences on the country revenue because those regulations are not in the form of money. In order to regulate and controlled those barriers, an international organization has been created: the World Trade Organization. By definition, the WTO “deals with the rules of trade between” countries at an international or “near global level” ( WTO.com). The organization is composed by countries that signed a document in order to facilitate trade, import and export, and on the other hand, enable countries to respect their own goals in a social and environmental point of view. The organization encourages negotiations and helps to resolve conflicts interest. However, countries decided to create those barriers for specific reasons. These types of barriers have been created by countries in order to regulate the import of specific products. The first reason is to support the domestic production. Indeed, the globalization of the exchanges is a current trend but to protect the small companies and manufactures, governments founded some import rules. In addition, these barriers are also a solution to protect the local employment. If a country just imports products, the work market would be affected and the employment rate would decrease. Finally, the last objective is to reduce consumption and reliance on exports. In this international trend, countries should find a balance between exports and imports in order to support the consumption and survive. However, barriers are also a solution for countries to increase their revenue thanks to the taxes on the import products. Furthermore, these types of barriers have several negative impacts on the company which export. First, these barriers become an obstacle to launch a product. Because of too much rules and quality standards, a company sees its markets reducing. Besides, the company becomes less competitive on the international market; for these reasons, the company can stop its business. To finish, the impact occurs also on the company revenues. Indeed, because of those barriers, they have to increase spends, investments, and reviews their marketing budget in order to answer to the new market ask and rules. To illustrate the theory, a quality standard in Europe, called “C E”, has been created in order to control the import in the European Union. It confirms that the product can be used and answer to some special security norms. Indeed, if a manufacturer wants to integrate the European market, its new product must succeed the tests before obtain the logo on its products. Some special agencies are authorized by governments to evaluate new products and give or not the CE norm on a product. Before obtaining the logo, the company has to follow 10 stages. The first stage is to identify the documents related to your product. Secondly, the company has to choice the adequate procedure that can be an auto-certification or passing some tests. Then, envisage the time require to obtain the certification. Fourth, it is also crucial to seek if there are harmonized European standards applicable to the product. Then, the company has to be sure that the product would be authorized. The Sixth stage is to know if the product has to be certify by a special agency or if it is it a necessity; indeed, it depends on the type of product. The next stage is to update all the documents asks. Then, the company has to prepare the declaration of conformity accompanied by the supporting documents necessary. The ninth stage is to secure that no requirement, exclusively national, is in force in the countries where the product will be sold. Finally, the company can affix the mark CE on the product and/or packing. However, china found an alternative to this logo by creating his own logo which seems to be the same and which can induce in mistake countries: “CE” (China Export”). To conclude, if a company decide to launch a product in a market in a foreign country it has to take in consideration that there are often tariffs and non-tariffs barriers which should stop them. For this reason, the company should analyze the new market agreements and the business standard before integrated the market in order to follow the rules. Moreover, before launching a new product it is crucial to evaluate the promotion costs and thinking about segmentation and a specific strategy for each market because the company should not forget that they are differences between markets and countries. Work Cited Bsi-emea.com. WEB 19 Jan 2011 Internationalmarketing.joburl.net/. Web. Jan 19 2011. Koreus.com. Web. Jan 19 2011. Wto.org/. Web. Jan 19 2011.