1. Commercial Policy Commercial policy refers to any governmental measure that discriminates against foreign suppliers

2. Arguments for Commercial Policy To Protect Domestic Industries; To Save Jobs; National Security and Defense; To Protect an Infant Industry; To Raise Revenue for Government; Balance of Payments; Second-Best Arguments; and Others

3. Tools of Commercial Policy Tariffs; and Non-Tariff Barriers (NTBs) –Import Quotas; –Voluntary Export Restraints (VERs); –Export Subsidies; –Intellectual Property Rights; –Health and Safety Standards; and –Others

4. Tariffs A Tariff is a tax levied on imports. Tariffs can be Ad Valorem or Specific. The Ad Valorem tariff is expressed as a fixed percentage of the value of the traded commodity. The Specific tariff is expressed as a fixed sum per physical unit of the traded good.

5. A Preview of Conclusions A tariff almost always lowers world well- being. A tariff usually lowers the well-being of each nation, including the nation imposing the tariff. As a general rule, whatever a tariff can do for a nation, something else can do better.

6. Exceptions When a nation can affect the prices at which it trades with foreigners, it can gain from its own tariff. In cases where other incurable distortions exist in the economy, imposing a tariff may be better than doing nothing. In a narrow range of cases with distortions that are specific to trade itself, a tariff can be better than any other policy.