Barriers to International Marketing

International marketing as discussed above is not free from difficulties and barriers. The
marketer has to follow time-consuming procedures and meet the trade regulations. The tariffs
and taxes increase the prices of goods to be marketed. It creates tough competition with the
domestic goods. The trade restrictions also influence the volume of goods to be exported. It
indicates that there are several barriers to international marketing. Generally these barriers are
divided into two parts:
(i) Tariff barriers and
(ii) Non-tariff barriers.

(i) TARIFF BARRIERS

The tariff barriers are the barriers of taxes imposed on the export and import of goods. During
the period of laissez faire, such barriers were very nominal. Even today, countries adopting
bilateral or multilateral agreements lessen such barriers. Originally the tariffs were imposed to
meet the revenue requirements of the country. The government is in a comfortable position to
impose taxes to meet the expenses of security, defense and administration of foreign trade.
Gradually the tariffs became a successful instrument to protect indigenous industries against the
competition from the foreign products.
The tariff makes the imported product costlier and the product of indigenous industries become
cheaper. The import duties collected are used to subsidies the costs of production of indigenous
industries. The tariffs or duties may be levied as a fixed percentage of the value of imported
goods. Fixed sum of money may be charged upon the commodity. A modified value added
method is being used to buy taxes on import and export. Tariff barriers may be export duties,
import duties, transit duties, subsidies duties and anti-dumping duties.
a) Export Duties: Export duties are levied to acquire revenue as well as to meet the requirements
of the consumers. The export of raw material is discouraged by levying a higher rate of export
duties making export of raw material costlier. It helps to provide adequate raw material to
domestic industries. However, the export duties are levied at lower rate on the export of
manufacture goods to promote a higher amount of export. The exporting country levies export
duties to collect revenue on the export of rare commodities. The exporter cannot avoid payment
of export duties and has to follow the policies of government.
b) Import Duties: Import duties are generally levied to protect indigenous industries against
foreign industries. It makes imported goods costlier making the domestic production cheaper
which may invite more market. Import duties may be levied for collecting revenue. The
protection policy of India has levied such duties in the early of twenties of the twentieth century.
Import duties have been levied by the government to protect domestic industries against the
aggressive and unfair competitions of foreign products. The third purpose of import duties is to
rectify the unbalanced trade payment. The import duties are not uniform to all products but the
imported products are divided into several categories depending upon their utilities in the
national economy for the purposes of levying import duties.

c) Transit Duties: Transit duties are levied on the goods and products passing through a territory,
which provides the shortest route. Had the goods and products been shipped by the normal route,
the cost of transportation would have been higher. So they ship their products by the shortest
route. The territory, therefore, is in a favourable position to levy some taxes of the goods passing
through it. The transit duties were common in the old age but it is now very nominal to meet the
expenses of port-administration. Transit duties have been used to restrict trade in some cases.
d) Anti-Dumping Duties: When the exporting countries do not get a proper place in foreign
market, they sell their product below the normal price or below marginal cost of production to
capture the foreign market. It is known as dumping. The importing countries levy some duties on
such goods to protect the domestic product. Thus, the international marketer finds it difficult to
export its product. He has to adopt such policies, which may manage the export of goods in case
of dumping of goods.

e) Monetary Barriers: Government can effectively regulate international trade by exchange

control restrictions. Differential exchange rate is an indigenous method of controlling imports.
(ii) NON-TARIFF BARRIERS
Non-tariff barriers create difficulties in exporting of goods. These non-tariff barriers are
generally rules, regulations and restrictions.
These are not the duties or levies. They may be quantitative restrictions, foreign exchange
regulations, technical and administrative regulations: health and safety regulations, prior import
duties, legal formalities, state trading and procurements.
a) Quantitative Restrictions: The quantitative restrictions may be normally imposed in the
form of quotas and licenses. The quotas may be universal or bilateral depending on the
situation. The quantitative restrictions are more selective. The licenses may be given on
restrictive basis to slow down the speed of imports. The international marketer has to manage
its sale within the constraints of quotas and licenses. He ha... to follow these restrictions and
regulations.
b) Exchange Regulations: The exchange regulations are adopted to regulate Imports and to
restrict import to make the trade balance favourable or correct the unfavourable balance of trade.
Unless the regulations' are followed or clearances are made, the" custom authorities and import
administrator will not allow import of the goods. The marketer has to see that the trade
regulations are followed.
c) Technical Regulations: The technical regulations are mainly in terms of production-quality.
The quality of food and dresses, mechanical standard of electrical goods and machinery and
many other technical standards have to be maintained by the exporting countries so that the
product may be accepted by the importing country. The standard laid down by the importing
country should be strictly adhered to by the exporters. Sometimes, their discretionary powers
create more problems of easy flow of goods.
d) Health and Safety Regulations: Health and safety regulations are imposed on the food
products by the importing country. The environments are becoming difficult to import such
goods. The packing, labeling and processing are examined by the importing country and non-
compliance of such regulations makes the international marketing very difficult. Sometimes, the
exporting countries are unaware of the regulations and have to sell the product at very low rate
because returning back of such products may involve more costs. The international marketing,
therefore, requires knowledge of such regulations.
e) Import Deposits: The issue of import licenses requires deposit of import-value. The importing
authorities may require the exporters to deposit hundred percent amount of export-value with the
importing authorities. This deposit is security money to issue license. Generally, this deposit is
required from the unfamiliar exporters.

f) Consular Formalities: The importing countries need some formalities to be fulfilled, viz.,
certified invoices, import certificates, consular's certificates and use of languages of importing
countries. The importing countries may levy heavy penalties if the documentation formalities are
not compiled with. The documentation fees are also levied.

g) State Trading: The foreign trade is governed by the government which frames several import
and export policies. These policies change from time to time according to their economic plans.