A Comprehensive Report on International Trade Regulations and Impact

This report delves into the intricate relationship between international trade and government regulations, examining their impact on global commerce. It begins with an introduction to the importance of trade regulations from a global perspective, emphasizing how effective regulations can improve a country's economic standing and terms of trade. The discussion explores the roles of regulations in fostering economic development, highlighting the need for international regulatory cooperation to minimize trade costs. The report identifies potential market failures, such as asymmetric information and barriers to entry, and regulatory failures that can hinder trade efficiency. It then presents alternative regulatory options, analyzing their effects on costs and resource allocation, and the importance of government intervention to correct market inefficiencies. Furthermore, the report offers an overview of the US regulatory system, compares the regulatory burdens of the US with other countries, and discusses economic theories related to trade agreements. The report concludes with a comprehensive analysis of the effects of regulations on international trade, providing valuable insights into the challenges and opportunities within the global marketplace.

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................4
Problem statement......................................................................................................................5
Identification of alternative regulatory options..........................................................................5
Roles that regulations play in developing the economy.............................................................9
Overview of the US regulatory system....................................................................................11
Main economic effects of regulation........................................................................................13
Comparing the burden of regulation on US and other countries.............................................14
Economic theories of trade agreements...................................................................................16
Conclusion................................................................................................................................25
Bibliography.............................................................................................................................28

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Introduction
The whole study is going to discuss regarding regulations that are lying within any
country and how the regulations are having impact on the international trade and commerce.
The concept is important from the global perspective because the incorporation of better trade
and development will improve the position of the country so that they can improve their
terms of trade. This will definitely help the countries to increase their gains from trade.
Throughout the improvement in the comparative advantage, the improvement in the
economical tantrums and distribution of both capital and human resource is possible that will
definitely increase the resource capitalisation. This will definitely allow the financial and
non-financial institutions to put up a regulation in the economy. Improvement in the resource
distribution is important in the sense that through the utilisation of better accessibility in the
world market the countries like Russia and other developed nations will bring an
improvement in their comparative advantage. Not only this, but the government regulation
will minimise the economic hurdles and will bring in perfection in the market.
Practising good and healthy regulation will definitely allow the economy to restrict
the occurrence of market failure. It is important in the sense that through the utilisation of
regulation and standards, some of the economic sectors will grow and some of the economic
sectors will be having lean. It has been seen that through involvement of better trade
regulation, stakeholders and intermediary will be allowing the process of efficient utilisation
of resources. This is one of the important factors in the sense that through the participation in
international trade, the economic improvement is going to increase the global terms of trade.
Through this trade, the benefited country will have to pay less while importing goods from
abroad if the terms of trade is favouring them. On the other hand, if the terms of trade are
going against them then they have to pay more while making both import and exports. Most

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of the countries are improving their position regarding the comparative advantages and
opportunity costs. Through the incorporation of comparative advantage, the economies in the
international trade will be going to highlight the importance of the resource allocation and
will be able to indulge better technologies that not only increase the production capability of
the economy.
Through the innovations in the business, the supply chain management is going to
provide better quality of goods. This is an important issue in the sense that in order to
increase the innovation in the economy will bring in best tools for using the human resource
capital. In other words, through the improvement in the gain from trade will definitely
increase the global comparative advantage. The economy will be bringing in efforts so that it
will be increasing the man power of the economy that will not only allow the improvement in
the resource capacity but will also distinguish the goods and services that will be part of
tradable assets. Before implementing regulations, it is important for the government to
understand the meaning of global interconnection of tools and technology.
Through the incorporation of tools and technology both, the developing and
developed countries will be mainly looking to indulge the development of better accounting
of monitoring of resources. On the other hand, the innovation in the technologies will
obviously bring the communication within the economy strong. It is highly important for the
government to increase the stabilisation of the policy. The main aim of the government is to
restrict the market failure so that they can indulge the improvement. It is highly important for
the economy to predict the market failure and will be willing to incorporate the information
regarding the price of the goods and services mainly for the benefit of the economy but will
also aim to maximise the profit opportunity that the participating countries will be willing to
incorporate.

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Through the establishment of better economic ground, the international trade will be
one of the crucial aspects so that they can indulge the improvement in their policies in the
form of monetary and fiscal policies. The countries will also get indulged to the improvement
of capabilities through regulation but this is also true that most of the small economies will be
the one those will be suffered the most. Regulation will not only bring problems for them but
will also make the market more competitive for them to survive. It is common that initially
government takes many regulations for the developing countries but actually they resist the
future economic growth at least for 5 years as they do not get the access to best technologies.
Discussion
International regulatory cooperation (IRC) is now the focus of the government that is
dealing with the international trade and commerce due to the advent of the Transatlantic
Trade and Investment Partnership (TTIP) and the Transpacific Partnership (TPP). On the
other hand, trade policymakers are using IRC as strategy to minimise the regulatory biasness
and trade costs in order to improve trade. It has been acclaimed both by OECD and non-
OECD members that the trade regulations are important and will help the countries to achieve
long run growth and objectives. Introduction of Better regulation, Smart regulations,
Regulatory management and Good Regulatory Practices (GRP) will increase the development
of trade1. Moreover, in order to increase the welfare of both society and individual most of
the countries do take the help of the regulatory authorities. Moreover, the Regulatory Impact
Assessments (RIAs) is systematic approach that has enabled the development of better
policies that will not only indulge the development of the resources so that the countries
doing international trade will be able to attain the objectives that has been set in order to
1 Adhia, N., 2017. Happiness Economics and Its Discontents. Journal of Private Enterprise, 32(1), p.77.

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gains from trade2. The need for public intervention and possible option for intervention will
be identified by RIA. Some of the key steps for RIA regarding the international trade and
policymaking will determine the efficiency level of international trade.
Problem statement
It is important to identify the problems that an overall economy in the global level is
going to face. Problems that are being faced by the countries and companies due to trade
regulations can be classified into two main groups in the form of market failures and
regulatory failures. Among the market failure, asymmetric information, barriers to market
entry, monopoly power, transaction costs and other market imperfections that will lead to
market inefficiencies. On the other hand, presence of the market failure will lead to the
development of instable price, increase in corruption level, entry of corrupted business units.
On the other hand, presence of regulatory failure will definitely allow the incorporation of
proposing administration that sometimes bring in new policies and if administration is setting
up new targets for the country. One of the major problems that most of the developing
nations face is that if they want to ignite the development of new requirements then countries
will not be able to use their resources in an efficient manner. On the other hand, through the
improvisation of better development of policy framing that will definitely increase the
chances of being involved in the end.
Identification of alternative regulatory options
Alternative regulatory options is going to highlight the regulatory options is going to
indulge in the improvement in the economy. In the developing or developed nations,
practising regulations will automatically allow the incorporation of development and
2 Antonakakis, N., Balcilar, M., Gupta, R. and Kyei, C., 2017. Components of economic policy uncertainty and
predictability of US stock returns and volatility: evidence from a nonparametric causality-in-quantile
approach. Frontiers in Finance and Economics, 14(2), pp.20-49.

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channelization of resources into the desired level3. Now in order to increase the trade
regulations the cost that is incurred in the trade is going to indulge both the private costs and
social costs. For example, a company is having X number of employees and the company is
producing Y quantity of goods. Now in order to produce that Y quantity of goods, the
company is making the environment polluted then in order to minimise the pollution, the
government is giving two options. The first option is that the company should pay a tariff of t
in order to continue with the current level of production and the second option is the firm
have to reduce the rate of production4. Now in order to align the cost along with the
production, the firm will obviously choose the second option. Now in order to achieve the
second option, the firm will automatically sack down employees. Thus, sometimes-
alternative regulatory options are forcing the economy to take some of the strong factors.
This is important in the sense that the employees those will be sacked are paying the price for
the increase in the pollution in the environment.
This type of example can be found in other sectors too. Practicing good regulation
practise will help the government to look into the innovation and the technologies that are
being used in the economy. Through the improvisation of better technology of regulating the
economy, the monitoring policy of the government will automatically incorporate the
business in the form of better development. On the other hand, through the improvisation on
the development of resources will definitely allow the betterment of the performance of the
economy. The participation of the government in improving the prices for many social
activities is helping in the development of better economy. Sometimes, through the
regulations, the government is mainly looking for the development of swift flow of the
3 Anuar, A. and Huan, A., 2019. Multilateral Matters: January 2019.
4 Benton, D.C., Thomas, K., Damgaard, G., Masek, S.M. and Brekken, S.A., 2017. Exploring the Differences
Between Regulatory Bodies, Professional Associations, and Trade Unions: An Integrative Review. Journal of
Nursing Regulation, 8(3), pp.4-11.

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resources from their natural height to highest value to the society. Most of the private
organisations will be looking to maximis4e their personal values and in order to increase their
personal values they sometimes over price the goods that is not the true reflection of social
value.
With the government intervention to correct the prices, the government aims in
increasing the efficiency and the extent of the resource distribution. Through the
incorporation of the monetary and fiscal policies will allow the economy to identify the
resource distribution that will definitely increase the overall efficiency of the whole
economy5. Imperfect information or asymmetric information is one of the main
characteristics of market failure. Through the participation of the government will allow the
information to be spread among public in an efficient manner. The information that are
available regarding the trade, price and technologies that are being used in order to produce
the goods will also invite the development of investment opportunity. On the other hand, the
improvement in the economic zones through the regulations will allow the economy to grow
in an improved matter. This is because in some of the country, the free market is going to
help the economy and it is the main responsibility of government to identify the opportunity
of free market.
The main difference between principle based regulatory system and that of
implementation based regulatory system is mainly going to highlight and identify the
capability of the government to implement certain level of the policy and regulations.
Through the intensive use of the theories and policies, it will be easy for the economy to
implement strong policy that will definitely increase the overall efficiency in the economy.
Through the implementation of principle based regulatory system, the economy will be more
5 Bery, S., 2018. The G20 turns ten: what’s past is prologue. Bruegel Policy Contribution Issue n˚ 20| November
2018.

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adjusted to the changes in the price and economic booms or recession. On the other hand,
principle based regulatory system can bring improvement in situations can be characterised
by complaints. Through the improvisation of the development of prescriptive rules, based
approach will allow the business units and other bodies to follow the compliances by any
means. It has been seen that using bright line regulations are helping in the development of
technologies that may make them more counter-productive in nature6. This increase in the
production ability of the companies and the countries will be willing to identify the better
technology for using the resources. The urge for using better technology will come either
from public interest or from social perspective. This is important aspect in the sense that
through the utilisation in the technologies, the economy and the business house will be able to
bring in better business in the alternative form and will definitely allow the incorporation of
better production is closely associated with practising better regulations.
Sometimes, the government decisions is too some extent bias in terms of better
influence of special-interest money and politics and this is the situation where the free market
outcomes are impartial. During this situation, the efficiency of the market will only come
with the government participation7. This type of situation is most common in case of the
developing nations. In the initial phase of development, each country is like newborn baby. In
this phase, the baby requires the guidance of mother is required and likewise in the newly
emerged country require the guidance of the government. In order to prevent the economy
from the foreign aggression, government has to intervene in the form of regulations8. The
6 Boshoff, D.M.M., 2017. Draft Regulations for the Domestic Trade in Rhinoceros Horn, or Part, Product or
Derivative of Rhinoceros Horn.
7 Bushnell, J. and Humber, J., 2017. Rethinking trade exposure: The incidence of environmental charges in the
nitrogenous fertilizer industry. Journal of the Association of Environmental and Resource Economists, 4(3),
pp.857-894
8 Ciuriak, D. and Ptashkina, M., 2018. The Digital Transformation and the Transformation of International
Trade. RTA Exchange. Geneva: International Centre for Trade and Sustainable Development (ICTSD) and the
Inter-American Development Bank (IDB.

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regulations can be a part of the trade regulation, price regulation, fiscal and monetary controls
and many more.
Roles that regulations play in developing the economy
However, the role that regulations play is that they try to identify the areas within the
trade where the government intervention is important. It is important to identify the areas that
will definitely allow the incorporation of resource development. Sometimes, government
regulation helps in restricting the market failure. This happens because of the fact that in
these situations costs and benefits are not being truly reflected by the price of the
commodities. On the other hand, government regulation is also helpful for implementing
entry barrier9. This regulation of the government will support the development of economic
growth by allowing competition and innovations in the product technology and product
quantity. This will improve the long run competition within the economy and will eliminate
the short run over sightless of the country. If the net benefits that will be obtained from the
business are made transparent by the government, then the investors, shareholders, consumer,
worker and other employees will feel transparent regarding the improvement in the business.
Irrespective of having high growth opportunities in the countries having strong
regulations, some of the individual small business companies will not support the regulation.
One of the reasons is that small business units will not be able to compete with the outer
industries. This is important in the sense that through the development of better technology
will bring in more economic growth and will allow the companies to increase their resource
utilisation and they will be mainly looking to increase the resource channelization. Most of
the studies related to the regulation claims that regulations always brings better level of
competition in the market by bringing innovation in their products. It is important in the sense
9 Committee for Economic Development of The Conference Board. (2019). Regulation and the Economy.
[online] Available at: https://www.ced.org/reports/regulation-and-the-economy [Accessed 25 Apr. 2019].

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that through the improvement in the technology the companies will be mainly willing to
develop the resource gap that is helping other countries to grow. In order to bring in effective
regulations that will help the incorporation of better involvement of resources will allow the
business house to indulge in better improvement in business. This is important to identify the
major resources that will help in gaining from the trade. On the other hand, through the
resource utilisation, the improvement in better gains from trade will allow the developing and
developed countries to increase the momentum in the economic growth. It is important for
the countries indulged in the international trade that will allow the economy to highlight their
gaps. This is true in the sense that through the increase in the valuation, the countries will be
willing mainly to highlight gaps in their trade level.

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Overview of the US regulatory system
Figure 1: Total spending by Federal government on Regulation
(Source: Committee for Economic Development of The Conference Board, 2019)
The above diagram is explaining the fact that in the recent years, the US economy has
spent more than 50% on the social values that is closely related with the social values.
Moreover, the introduction of the resources will definitely allow the economy to value their
social norms and responsibility10. Increased amount of social value will definitely increase the
opportunity to trade off. Now in order to increase the development of the economic
conditions government will allow the economy to increase the resource distribution. Through
the incorporation of better business environment will allow the trading economies to increase
their distribution of the employability. Competition policy and regulation in US,
transportation industry comprising of airlines industry, communication industry in the form
of TV, telephone and internet have been predominantly got affected by regulations and many
more11. The incorporation of regulation from the government is also affecting the sectors
10 Datta, N. and Dhingra, S., 2017. 18 What next for US-Europe trade policy?. Economics and Policy in the Age of
Trump, p.193
11 Dhingra, S. and Sampson, T., 2016. What kind of relationship with the EU is best for the UK economy post-
Brexit?. LSE European Politics and Policy (EUROPP) Blog.