What is a Commercial Policy?

Malcolm Tatum
Malcolm Tatum

Also known as an international trade policy or simply trade policy, a commercial policy is a strategy used by governments to regulate the process of trade with other countries. Typically, the idea behind policies of this type is to maintain a balance in free trade that helps the economy of the nation in question remain in a desirable state. There are several key elements involved in the creation of any effective commercial policy, including regulations regarding tariffs, import and export quotas, and trade subsidies.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

The underlying goal of any commercial policy is to establish and maintain equitable trade relations with other countries. This is often accomplished by enacting regulations that help to balance the amount of imports and exports that are involved in conducting trade with other nations. The exact nature of those regulations will vary, depending on the type of goods and services involved, and the impact that trading those products would have on the economy if the balance were not maintained.

A number of issues must be addressed in order for a commercial policy to be effective. Typically, a policy of this type will include provisions that help govern the presence of foreign-owned companies within the borders of a given nation. The policy will also include standards for various types of trade tariffs, as well as placing limits on the amount of imports that may be received into the country during a specified economic period. Some policies will also address the issue of exports, helping to regulate the sale of domestically produced goods to foreign nations in a manner that is anticipated to keep the national economy in a state of balance.

While a commercial policy is often developed by an individual nation in relation to trade with other nations, there are situations where several nations voluntarily choose to utilize the same policy. This is the case with the European Union, where many of the member nations make use of trade policies developed for the Union as a whole. In the case of the EU, this has been a standard approach since its creation in 1957.

One key aspect of a commercial policy is that each element that is included in the overall policy must be evaluated from time to time. As economic conditions within a nation change, some aspects of the policy may not longer be in the best interests of the country. When this is the case, adapting some aspects of the policy, or possibly replacing those aspects with an entirely new set of regulations, may be the easiest way to avert the potential for negatively impacting both the national economy and foreign trade relations in the future.

Malcolm Tatum
Malcolm Tatum

After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including wiseGEEK, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.

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