International Business

Mechanisms that regulate international trade
Free trade-Free trade is a policy which a government does not discriminate imports or exports of certain products between countries. According to the law free trade enables countries to trade freely between them of goods and services. The concept of free trade is a factor to the aspect of globalization.

Barriers to trade

Trade barriers- Trade barriers are imposed government restrictions on international trade. These barriers can be seen in forms of:

-Tariffs
-Import/Export licenses
-Subsidies
-Embargoes

Economic alliances such as the EU are crucial to building a strong force of economic financial statuses for both people and countries. For example: Because the UK are importing chocolate from Belgium it means that people are more willing to spend money on chocolates as there are more types of chocolates available to them. As well as making customers potentially spend more money on products from different countries, companies who import these products have to pay a certain amount of tax to the government for its trading activities, and as a result that’s the reason why for example: American sweets are more expensive. Companies raise the price of their products in order to cover up for the transportation of the product and the taxes imposed by the government on the product. For Volkswagen because they operate in multiple countries it means that they are able to distribute their cars to people from all around the world increasing their profits as well as the governments financial status.

Tariffs- In the simplest term a tariff is a tax imposed by the government etc. This is a big factor which could potentially affect Volkswagen as they have to look at how much tax a certain government is imposing on their products. Countries which are under