ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Free trade involves the lowering or elimination of protective tariffs and other trade barriers between two or more nations.

Detailed explanation-2: -A free trade agreement is a pact between two or more nations to reduce barriers to imports and exports among them. Under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.

Detailed explanation-3: -The most common barrier to trade is a tariff–a tax on imports. Tariffs raise the price of imported goods relative to domestic goods (good produced at home). Another common barrier to trade is a government subsidy to a particular domestic industry. Subsidies make those goods cheaper to produce than in foreign markets.

Detailed explanation-4: -Tariff barriers-Tariff barriers are taxes imposed by a government on imports or exports of goods. These taxes can be used to increase the cost of imported products, make inputs available to domestic producers at more competitive prices and raise revenues for governments.

Detailed explanation-5: -Tariff and Non-Tariff Barriers Examples of tariff barriers include Export duties, Specific duties, Import duties, Ad-valorem duties, Transit duties, Compound duties, Revenue tariffs, Protective tariffs, Counter-vailing and Antidumping duties, Single-column tariff, Double-column tariff.