Unintended Barriers to Trade

As previously mentioned in an earlier bog, international trade increases competition resulting in more options to the consumer and lower prices. Nations are continuously working towards freer trade. Barriers to trade are most commonly thought to be tariffs, or non-tariff barriers such as licenses (import & export), quotas, subsidies, currency devaluation and many other government induced restrictions between nations. However, there are many other barriers to trade that are not so obvious. These are unintended barriers that can be caused by unrelated events such as social problems, political crises and natural disasters. Examples may include the war on terror, the Japanese Earthquake of 2011, Somalian Pirates, and many others. These events have an impact on international trade. Below is just a few of the ways in which the war on terror has impacted trade for the U.S.

September 11, 2001 became a day of great tragedy when terrorists launched an assault on the Twin Towers, New York’s World Trade Center and the Pentagon Complex in Washington, D.C.  Nearly 3000 people died in the attacks. In response, President George W. Bush tightened security throughout the United States. This tightened security caused a slowdown and added costs to trade. The war on terror forced the U.S., and many other countries, to review and improve the ways in which they protect their borders and citizens by monitoring the items that are imported/exported.

These new security checks have resulted in numerous transportation delays. About 2 hours have been added each ships arrival and an additional charge of $1500 for each tugboat escort. Security along borders also slowed down trucks hauling cargo from Canada and Mexico into the U.S. Crossing borders from Canada to the U.S. used to take 1-2 minutes, after the attacks on 9/11 they were taking anywhere from 10-15 hours. The additional security expenses are added to the transportation costs for each shipment. “These costs are an obstacle to trade and impede the realization of gains from trade liberalization. Simply put, differences across countries in transport costs are a source of comparative advantage and affect the volume and composition of trade” (Carbaugh, 2010).