Question

2) Transportation costs play a major role in determining whether or not a product is tradeable. TRUE FALSE EXPLAIN: 3) Multilateral trade policy conducted by GATT and WTO has had an easier time rolling back non-tariff barriers to trade than lowering tariffs. TRUE FALSE EXPLAIN:

Answer 1

Question No:2

The statement is true. Transportation costs are a major factor that determine whether to trade a product or not. In the case of international trade, cost of transportation is more than tariffs, somewhat 5 times more in certain countries. As a person pay tariff for international trade, transportation costs should also be paid at each and every stage. Because, without transporting the goods by any means, it cannot cross the border of a country.

Through roadways, railways as well as pipelines, land transport can be done. Ocean shipping transport is the waterway transport. Air transport is another mode of transport. For long distance of transport, air transport is the best way. Time taken for a transport decides the expected time of export and import. This transportation time will be a barrier to trade sometimes. Only agricultural products are exempted from this transportation costs.

Hence, by paying transportation costs only, goods can be exported as well as imported. Hence, this is a determining factor of trade.

Question No:3

The statement is true. GATT (General Agreement on Tariffs and Trade) was found out in 1947-48. Trade encouragement was their motive. In order to achieve their purpose, they need to reduce the trade barriers, especially the trade tariffs. Hence, GATT had conducted eight meetings for trade negotiation. Primarily, their aim was to lower the tariff rates on goods imported. That was the thing they had discussed in the meeting.

Therefore, after several years, these tariff rates come down to 4%. WTO is the organization which helps nations to make changes in the industrial field. Hence, they allow GATT to make their wish fulfill. Even though their primary aim was to lower the tariff rates, later in the 1980s, they started the negotiations for covering non-tariff barriers on goods also along with the reduction of tariff rates. Hence, now, the rolling back of non-trade barriers is more significant than reducing tariffs as per the multilateral policy.