explain the way by which government regulate the foreign trade
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Governments three primary means to restrict trade: quota systems; tariffs; and subsidies. A quota system imposes restrictions on the specific number of goods imported into a country. Quota systems allow governments to control the quantity of imports to help protect domestic industries.
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• One of the ways through which the government controls and regulates foreign trade is through trade barriers which are the restriction put by the government to increase or decrease foreign trade and to decide what kinds of goods and how much of each, should come into the country.
• The government could also place a limit on the number of goods that can be imported. This is known as quotas. For example, in the case of Chinese toys, quotas should be used to a limited extent to protect the Indian producers manufacturing similar toys which are being imported, thus ensuring equal competition.
• Subsidies, another way of regulating foreign trade by the government, raise the price of foreign goods relative to domestic goods, which reduces imports.
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