Restrictions on trade are often imposed by governments to protect the home economy and for security reasons. Known very commonly as import bans, these are either levied on certain types of products or for all products from certain countries, depending on the reason for the ban.
Unlike the trade restrictions where a rise in tariff is expected on certain imports, import bans typically mean that the specified goods cannot be imported at all.
Why do we have import bans?
Governments generally impose import bans
- To protect the health of the citizens in the country. This is often the case when the government fears possible harm to their country through a specific import from a country.
- To ensure the safety of the country for more political reasons where the ban is referred to as a sanction. This often happens when a country violates human rights or aggressive in its approach when other countries might deem it right to prevent imports. It is also the measure adopted during times of war.
- To foster the local business/employment in the country from getting overshadowed by foreign imported goods.
- To save the emerging industries and to fortify the defense of the country.
- To protect the environment and to combat trade policies from other countries.
Apart from complete bans, governments also impose a tariff on imported goods, which will help increase the revenue for the government. These tariffs also help to balance out the trade in the industries within the country and over the international trading platform.
Can a country completely ban all goods from a country?
If the country is part of the WTO (World Trade Organization), earlier known as GATT, then the answer to the above question is no, unless there is a war underway between the countries. Currently, WTO has about 159 countries as members, with 24 countries having negotiations with the organization. There are many benefits to being a part of the WTO, and yet it also comes with certain rules to follow.
While WTO’s foreign trade law does allow governments to impose bans on certain products or goods or restrict the import of certain goods but it doesn’t allow governments to completely ban all imports from another country under WTO. Countries are also allowed to ban certain products if the same is not allowed into their land as per their legislation.
The flipside of import bans
While countries impose import bans to stabilize their country’s economy, to fortify their security, there are also a few drawbacks to the import bans.
When a particular product is banned from being imported, then the price of the same product from the domestic market can rise. This is a possible scenario when the replacement product in the domestic market is unable to meet the demand rate. But again, this may not be the case for all kinds of goods and products. The impact of a ban on a particular product will also depend on the kind of product, whether it is an essential product, if it can be replaced by a domestic version, and other reasons.
Of course, if the government is imposing a ban purely for security and health reasons, then there would be mitigating factors to balance the trade of such products within the country.
References:
https://trade.ec.europa.eu/doclib/docs/2015/december/tradoc_154025.pdf
https://open.lib.umn.edu/principleseconomics/chapter/17-3-restrictions-on-international-trade/
http://www.globalization101.org/import-restrictions/#:~:text=Governments%20use%20import%20restrictions%20to,harm%20public%20safety%20or%20health.
