A commercial policy is a set of rules that are intended to change international trade flows. These regulations are usually to restrict imports. Every country has a trade policy which public officials formulate to fit their country’s needs. The goal of these policies is to boost the nation’s international trade. It needs to help a nation’s international trade run smoothly by setting clear standards and goals which can be understood by potential trading partners. In some cases, groups of nations work together to create mutually beneficial trade policies.
Commercial policy and involves different types of action. These can include the elimination of quantitative restrictions or the reduction of tariffs. There are eight objectives of commercial policies. These include:
- To appreciate trade with other nations
- To protect domestic market prevailing in the country
- To increase the export of particular product which will help in expanding domestic market
- To prevent the imports of particular goods for giving protection to infant industries or developing key industry or saving foreign exchange
- To encourage the imports of capital goods for speeding up the economic development of the country
- To restrict the imports of goods which create unfavourable balance of payments
- To assist or prevent the export or import of goods and services for achieving the desired rate of exchange
- To enter into trade agreements with foreign nations for stabilizing the foreign trade.
Many nations attempt to protect their industries with commercial policies that place a heavy burden on importers. This allows the domestic producers of goods and services to get ahead in the market with lower prices or more availability. While other countries avoid trade barriers and promote free trade. These give domestic producers no special treatment and international producers are free to bring in their products.