Trade Obstacles That Are Made By EU Economics Essay

Trade Hurdle is defined as any government insurance policy or regulation that restricts international trade. It's the way which is used to protect the home market from overseas competitors in terms of government plans, regional trade contracts, legitimacy, expansion and protectionism e. g. it is utilized to help local organizations export and thus build worldwide market share by doing such things as providing them with subsidies by means of tax breaks and low interest rate lending options. Other common reasons include

Protect local jobs by shielding home-country business from foreign competition.

Encourage local development to displace imports

Protect infant industries that are just getting started.

Reduce reliance on international suppliers.

Encourage local and overseas direct investment

Reduce balance of obligations problems.

Promote export activity

Prevent foreign companies from dumping (advertising goods below to be able to accomplish market show)

Promote political goals such as refusing to trade with countries that practice apartheid or deny civil liberties to their citizens.

(Rugman and Collinson 2006) In my own proposal, it'll be examined how EU use its Trade Obstacles Regulation to safeguard its market against challengers. Turkish market is the main one of the competitors in conditions of Trade Barriers Regulation and EU governmental insurance policies in trade region. To safeguard its domestic market and also to continue labour those obstacles are being used effectively to gain success against international competitors.


Dealing with trade barriers to trade in the international trading system does not have a long record. Until just lately it was basically underweighted compare to other more noticeable trade obstacles such as tariffs and quotas. Liberalization efforts in the framework of the General Contract on Tariffs and Trade (GATT) for example, epitomize this avenue. Technical Obstacles to trade issue was helped bring into GATT plan in 1973. Contract on Technical Barriers to Trade (TBT), that was concluded, and an integral part of the earth Trade Business (WTO) package authorized by all WTO customers. (http://www. wto. org/english/tratop_e/tbt_e/tbt_e. htm)

Importers have large complications in obtaining required complex legislation of the importing countries. In charge government bodies for tariffs and quotas are usually national ministries of foreign investments, and sometimes custom businesses. Technical legislation, however, may be produced, integrated and supervised by different national specialists, including local government authorities, such as National Health, Environment, Agriculture, Industry and Labour Organizations. Complex requirements are also broader, they may include, environment, general public safe practices, health, labor related issues as well as product specifications. They can be discriminatory: compliance of criteria and regulation is normally more costly for foreign producers and importers than that for domestic producers. (Baldwin 2001)

The European Union has always been an important trading partner of Turkey. Trade relations with the European union has accounted for around 1 / 2 of Turkey's imports and exports. Its exports to the EU countries in 2001 accounted for $16 billion, that was around 51 percent of its total exports of $31. 5 billon. Inside the same year, the value of Turkey's import from the EU was $26 billon, 44 percent of its total transfer. As of 1999, Turkey is the EU's 7th biggest export vacation spot and 13th biggest exporter to the EU. A Traditions Union covering commercial products was officially proven between Turkey and the European union in 1995. Turkey is probably the countries where the union gets the highest trade surplus. The traditions union would further open and consolidate the Turkish market for Community companies. All tariff and non-tariff barriers might be removed. Community exporters will thus earn preferential and free access to this young and generally non saturated market of almost 70 million consumers (Allen2000).

Most obvious dynamic gain for the Turkish companies will be made from economies of level anticipated to two areas of the removal of technical obstacles. First, as Maskus and Wilson (2001) reveal, "common requirements and polices can promote economies of range by permitting companies to stay on a limited range of product characteristics or functions. Sector that were segmented by changing expectations can be rationalized by increased output level. "Second, as noted above, technological harmonization will promote integration of the Turkish products not only with the city markets but also global ones. As market gets bigger, fixed costs of development get smaller. Exploiting the economies of level will help in Turkish products to accomplish international competitiveness.

Recognizing this, the ultimate objective of the study is set as to explore implications of trade obstacles in Turkish Company which is known Eczacibasi Firm. Founded in 1942 by Dr. Nejat F. Eczac±ba±, the Eczac±ba± Group takes its name from the honorary name "main pharmacist", conferred on the daddy of Dr. Eczac±ba± at the change of the last century. Eczac±ba± is a dominant Turkish commercial group with 39 companies, 9, 200 employees and a put together net turnover of $3 billion in 2008.

Eczac±ba±'s core sectors are building products, health care and consumer products. Additionally, the Group is energetic in finance, it, welding technology and land development. In Turkey, Eczac±ba± is the leader in the majority of its businesses and has syndication networks for building products, agricultural products, pharmaceuticals and fast-moving consumer goods that are among the most powerful in their sectors. Internationally, Eczac±ba± is best known because of its flagship VitrA brand, a robust contender in global bathroom and tile markets. Additionally it is a major exporter of tissues newspaper, welding electrodes, electric smart cards and industrial raw materials such as clay and feldspar. International partnership is a central component of the Eczac±ba± Group's development strategy. Eczac±ba± has nine international joint ventures and numerous assistance contracts with leading international companies. Many of these are grounded on the concept of long-term mutual benefit, predicated on firm business conditions and moral business methods.

The Eczac±ba± Group's mission is to be a pioneer of modern, high quality and healthy lifestyles. Appropriately, the Group motivates each of its companies to exceed established specifications in their industries and increase consumer benchmarks of product and service quality. Through sponsorship and dependable corporate techniques, it also helps bring about social and economic development that nurtures ethnical and technological activity, protects the surroundings and preserves scarce natural resources ( http://www. eczacibasi. com/channels/1. asp?id=141). Eczacibasi Company is one of the biggest pharmaceutical products and agricultural products specialist in Turkey. According to European Union Trade Barriers Rules, this group plus some other companies from turkey, 've got exporting problems to europe countries scheduled to lack of quality, using cheap recycleables that happen to be exported from third countries to Turkey, lack of certifications, using wrong data whilst distributing products to the European Countries and so forth. After signing Customs Union agreement; Turkey saw some advancements in those areas and you will be moving on to boost to catch EU standards in conditions of EU Trade Barriers Legislation. (Arvius 2005)


This chapter is supposed to point the goals and objectives of the dissertation

4. 1 Aim

The goal of the dissertation is to determine what are the barriers that created by European Union to protect its market.

4. 2 Objectives

To determine trade barriers over a commercial sense

To understand the mounting need for the governments' policies on trade barriers

To determine the key role played by a proper management of trade obstacles in companies

To reveal the value of the trade barriers in international trade, redefining the term of barriers on commercial base

To offer an insight into analyzing the prevailing government and international policies

To assess from what extent the firms have been influenced by the obstacles facing across the world

To discuss over if the trade barriers might be due to export and import

So concerning emphasize on the importance of trade barriers, to evaluate the key role performed by legislation and legislations

Determine the appropriate trade barrier techniques applied by the governments that seem to acquire succeeded in operating out the tough economy through robust manage

To determine of incorrect trade hurdle techniques embraced by the E. U governments that have did not struggle with working with the third countries.


The core explanations why I give attention to the problem of what are the barriers in the European Union are adopted

In order to secure understanding of trade barriers which afflicted trade between Turkey and Western european markets, I prefer to analysis the issue comprehensively. I believe that I will reap the benefit from this work in my future profession. Thus I believe I will be able to deal with the dissertation requirements. Equally, I might be provided with accurate information as to the topic, since I have associates within company that will probably assist me in obtaining more reliable information.

Hence, I would like to review over this problem. Meanwhile, when i strive to secure accurate and neutral information, I am likely to have interviews with people that are likely to donate to the furtherance of the dissertation, having interviews with me at night. Needles to say, these interviews will be unprecedented experience for me.

6. Books REVIEW

Trade Barriers

International trade increases the quantity of goods that domestic consumers can choose from, decreases the price tag on those goods through increased competition, and allows domestic industries to dispatch their products in another country. While many of these seem beneficial, free trade isn't generally accepted as completely beneficial to all gatherings. Trade barriers are being used to protect home employment, consumers, baby industries, national security and then for retaliation (Countries could also set tariffs as a retaliation strategy if they feel that a trading spouse has not performed by the guideline). (Mcdermott and Taggart 1993)

Government imposed limitation on the free international exchange of goods or services. Trade obstacles are generally labeled as import insurance policies mirrored in tariffs and other import charges, quotas, transfer licensing, customs procedures, standards, immediate procurement by federal government, subsidies for local exporters, insufficient copyright protection, limitations on franchising, licensing, technology transfer, restrictions on foreign direct investment, etc. http://www. businessdictionary. com/definition/trade-barrier. htm at 10. 37 14. 12. 2009.

Commonly used barriers are: Price-based barriers; it is dependant on the value of the goods. Tariffs raise profits for the government, discourage imports, and make local goods more appealing. The most common is the transfer tariff, which is levied on goods delivered into a country. Less common is the export tariff, for goods sent out of the united states, or transit tariff for goods passing through the united states. Secondly, quantity restrictions, often known as quotas, restrict the number of units that may be imported or the marketplace show that is allowed. For example European Union limits Japanese automobile imports to 10% of the total market.

Thirdly, sometimes a host of international firms will fix prices or quantities sold in order to control price and it's really known as cartel. A well-known example is OPEC. By handling the supply of oil it offers, OPEC seeks to regulate both price and revenue. Fourthly, non-tariff obstacles are rules, polices, and bureaucratic red tape that wait or preclude the purchase of overseas goods. These obstacles limit imports and protect home sales. (Collinson and Rugman 2006).

Tariffs are transparent and are usually based on the value of the product or service. Generally, tariff rates are relatively low today, especially among developed countries. With overall tariffs low, governments often try to shift something into higher tariff category while companies develop strategies to benefit from the lower tariff category. For instance, The European Union imposes a 288% tariff on imported fruit and vegetables, which is aimed toward protecting the farm lobby in the Union. Quotas are quantitative constraints on the importation of goods typically spelled in conditions of items or value. Non-tariff obstacles are hurdles to trade, not anchored in regulations and official laws and therefore are not translucent. Since, they aren't transparent, they may be a lot more difficult to respond to and offer an advantage to home businesses. (Luo and Shenkar 2004)

Tariffs are applied for just two clear economic purposes. First, they provide revenue for

the federal government. Second, they improve economical returns to organizations and suppliers of resources to local industry that face competition from overseas imports. Tariffs are widely used to protect local producers' incomes from international competition. This cover comes at an economic cost to local consumers who pay higher prices for import contending goods, and also to the economy as a whole through the inefficient allocation of resources to the import competing local industry. (Gandelfo 1998)

Non-tariff barriers to trade are believed as government regulations, regulations, regulations or practices that either protect local industry or products from overseas competition or artificially stimulate export of particular domestic products. Quantitative restrictions, tariff quotas, voluntary export restraints, orderly marketing agreements, export subsidies, federal procurements, import licensing, antidumping/countervailing responsibilities and technical barriers to trade are some examples of such non-tariff obstacles. Non-tariff barriers likewise incorporate a wide variety of operating practices ranging from bureaucratic delays in producing obtain permits, political squabbles, "buy nationwide" promotions, infrastructure head pain and unethical business procedures. Such procedures constitute non-tariff barriers and tend to be justified from the perspective of public plan, i. e. , the need to protect human health and safety, to safeguard infant (domestic) sectors and the surroundings. (Low et al 1999)

On the other palm, Czinkota and et al (1996) signify that we now have literally a huge selection of ways to build a barrier. Some of the trade obstacles that exporters face, restrictive licensing, special transfer authorization, short-term prohibitions, advance transfer deposits, excise duties, consumption taxes, country quotas, health insurance and sanitary prohibitions, foreign exchange licensing, service charges, turnover and internal taxes an etc.

7. Methodology

7. 1. Overall Approach

In this chapter, it is supposed lay out my approaches to accomplishing the goals of my dissertation. The chief work- channels associated with data collection consist of an extensive literature review and primary data collection provided by interviews and questionnaires.

Methodology progresses to look at the data examination, being used the likely risks that might hinder the dissertation in progressing will be explained.

Research can be categorized three various ways based on purpose. They are



Exploratory (Zikmund, 2000)

Descriptive research

Generally speaking, the goal of descriptive research is to specify characteristic of any trend. Descriptive research can be involved with providing the answers to who, what, when, where and how questions,

Casual research

The major goal of informal research is determine cause and impact between parameters. Therefore, it's quite common with an expectation of the relationship to be described.

Exploratory research

The central goal of the exploratory research partcipates in narrowing the degree of the research topic and changing the uncovered issues into described ones. All together, the studies that are keen on shaping the principles can look at existing studies from the subject, and also speak to distinguished and competent individuals.

Moreover, the researchers might be informally analysis the situation, exploratory research is directed to allow the researcher to find a phenomenon.

This dissertation is targeted to provide understanding of barriers to operate and its amazing aspects. With regards to the research goal, I regard my analysis as exploratory. This dissertation intends to research the idea through providing the research question.

In the books, there are two accepted solutions to carry out a research. These are named as qualitative and quantitative methods. Disparities between your methods can be explained as the desk shows below.

Source: Yin, 1994, Case Study Research, Design and Methods, P. 6

So long as the researcher want to gather and investigate detailed data. They largely apply qualitative method. In other words, the purpose of qualitative method is predominantly to obtain additional comprehensive knowledge of a phenomenon. Because the nature of the study indicates a deeper research so as to provide sufficient data, qualitative method will be exploited.

With value to main research strategies are labeled as experiments, survey, archival research, histories and case studies.

Taking research strategies into consideration are by reason of remarkable abilities of case study and archival evaluation to create answers to the question "why", "what", and "how". These stated strategies ensure the researcher to get underlying understanding of the context of the contemporary events; I'll therefore exploit these strategies for my dissertation.

7. 2 Data Collection Methods

Data collection is conducted by two ways. They are secondary and most important data collection. Main data is thought as the info that is provided by the researcher so as to get yourself a specific data, whereas secondary data asserts the data that have recently been provided.

After deciding research strategy the second step is decide on a sample, in order to gain an all- embracing understand of the concept of trade obstacles how used in the trade between Turkey and EU countries. The first level of my technique will therefore be to carry out an extensive overview of all the relevant literature. Similarly, at this stage the key books will engage with the following areas

Review of magazines relating to operate barriers, for instance, articles, journals and literature that are worried with international trade barriers.

So as to investigate the idea effectively and sufficiently, it pays to acquire an in- depth understanding of the issue. Quite simply, the prevailing legislations and rules in international trade and the firms which have been coping with the impacts of the legislations and regulations will be analyzed. Moreover in order to enrich the study, the recent incidents will be examined related international trade legislation and legislations. Concurrently, the financial times websites and relevant trade parts of BBC, Yahoo and CNN website will be exploited to underpin the problem.

Furthermore, for means of providing an perception into the strategies of the Turkey authorities and EU Commission insurance policies will be reviewed. Furthermore, whereas the procedures have extended to impact fiercely export and import between EU and Turkey. Hence, to secure more reliable more info regarding the recent circumstances, government publications on websites will be adopted.

So concerning obtain primary data, I will attempt to carry interviews with lots of professionals that work in the company. Therefore, prior to interviews, I will create a short series of questions to ask. However, even though I'd opt to have one-to-one interviews, the managers might tend to avoid holding interviews. Hence, chances are that I would have interviews on the telephone, or probably through the e- mails.

7. 3 Data analysis

The dissertation will make use of two different analyses. Firstly, it will question over a number of interviews with division managers of the business in Turkey. Second, it will analyze documentations from the prevailing trade conditions. Later, I will compare the collected data provided by the interview and documentations with my conceptual construction and the current theories associated with the topic. Prior to presenting the studies, both similarities and discrepancies between theory and the retrieved data will be analyzed.

7. 4 Learning resource Requirements

The overview of literature and documents from the topic of my dissertation will be gained from library and electronic publications facilities.

By method of phone and the internet, the interviews which I will make with international trade experts who works within the Eczabasi Organization in Turkey will be held or they'll be asked to answer questionnaires one-to-one or via e-mails.

7. 5 The likely risks

The risks recognized

It may be difficult to get the appropriate and appropriate information, making an interview with the department managers. Hence, I will try to make some interviews with acknowledgeable people who are capable of ensuring me to get the appropriate information my dissertation necessitates.

Due to obstacles to obtaining data, my suggested timetable might slide. So as to deter any hold off in providing data, I will try to properly deal with time I have been given.

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