What is Commercial Policy? Instruments of Commercial Policy

Commercial policy or trade policy is a governmental policy governing trade with other countries. This covers tariffs, trade subsidies, import quotas, voluntary export restraints, and restrictions on the establishment of foreign-owned businesses, regulation of trade in service, and other barriers to international trade.

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Countries that are part of an economic union often have a single commercial policy that determines how member countries can interact with non-member countries.

For example, member countries of the European Union have a common commercial policy.

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In modern times, the commercial policy of every country is generally based on the encouragement of exports and the discouragement of imports. The exports are encouraged by giving preferential freight rates on exports, subsidies, etc. Imports are hindered by erecting the tariffs walls, exchange controls, quota system, buy at the home campaign, etc.

Features/ Objectives of Commercial Policies

1. To improve & extend international aid/co-operation through the exchange of goods & making a contract with different countries.
2. To create an international market for our local products to increase export.
3. To participate in the international trade fair to introduce our local products through govt or private initiatives.
4. To take proper steps for promoting the export of non-traditional items.
5. To launch publicity campaigns for creating a new market for traditional products.
6. To create a favorable environment for foreign trade/exchange.
7. To provide export facilities to exporters.
8. To reduce the import of luxurious goods.
9. To import raw materials, machinery, parts & accessories necessary for producing goods.
10. To promote the establishment of export-oriented industries.
11. To meet the need for essential goods.
12. To encourage govt. & private sector industry for foreign trade.
13. To stabilize the foreign exchange rate.
14. To promote the export of man-power, to increase the earning of foreign currencies.
15. Encourage domestic and foreign investment in overall industrial development.
16. Encourage especially the development of small & cottage industries.
17. Encourage the development of agro-based and agro-supportive industries.
18. Stimulate the development of industries based on indigenous raw materials and indigenous technology
19. Motivate investment in the intermediate and basic industries
20. Create possible opportunities for revitalizing and rehabilitating controlling the quality of products; and
21. Take appropriate measures for preventing environmental pollution and maintaining the ecological balance.
22. Control the internal/external trade and other commercial activities of the economy