DEFINITION of 'Commercial Policy'

The regulations and policies that determine how a country conducts trade with other countries. A country's commercial policy includes the use of tariffs and other trade barriers, such as restrictions on what goods can be imported or exported, and which countries are allowed to import or export goods to the home country.

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. An example of an organization with a common commercial policy is the European Union.

BREAKING DOWN 'Commercial Policy'

Commercial policies are a point of contention in international trade, and are one of the underlying reasons for the existence of organizations such as the World Trade Organization (WTO). Because a country's commercial policy can include the use of tariffs and trade barriers, free trade is negatively impacted.

RELATED TERMS
  1. Dollar Drain

    When a country imports more goods and services from another country ...
  2. Tariff

    A tax imposed on imported goods and services. Tariffs are used ...
  3. Terms of Trade - TOT

    The value of a country's exports relative to that of its imports. ...
  4. Net Exporter

    A country or territory whose value of exported goods is higher ...
  5. Commercial Code

    Private and public laws that regulated how commerce is to be ...
  6. Trade War

    A negative side effect of protectionism that occurs when Country ...
Related Articles
  1. Investing

    Growth and Politics In Exports

    An export is a good or service that is shipped from one country to another for sale or trade.
  2. Insights

    The Basics Of Tariffs And Trade Barriers

    Everything you need to know - from the different types of tariffs to their effects on the local economy.
  3. Insights

    The Balance Of Trade

    The balance of trade is the difference between a country’s imports and exports. A trade deficit occurs when a country buys or imports more goods from other countries than it sells or exports. ...
  4. Investing

    Understanding Net Exports

    Net exports are the difference between a country’s exports and imports.
  5. Investing

    What's the Balance of Trade?

    The balance of trade is the difference between the value of all the goods and services a country exports and the goods and services it imports.
  6. Investing

    Tariffs

    Tariffs, or customs duties, are taxes imposed on foreign goods and services. In addition to providing a country with additional revenue, tariffs offer protection to domestic producers. Imported ...
  7. Trading

    Main Factors that Influence Exchange Rates

    The exchange rate is one of the most important determinants of a country's relative level of economic health and can impact your returns.
  8. Trading

    6 Factors That Influence Exchange Rates

    An in depth look at out how a currency's relative value reflects a country's economic health and impacts your investment returns.
  9. Insights

    8 Biggest Global Trade Offenders

    Countries launch protectionist policies to keep domestic producers safe. We list the top eight offenders.
RELATED FAQS
  1. Which countries have the highest tariffs?

    Find out which countries have the most restrictive import tariffs on international products, based on data collected by the ... Read Answer >>
  2. How can retail investors invest in commercial paper?

    Find out how individual retail investors can purchase short-term commercial paper, but why it rarely makes good investment ... Read Answer >>
  3. What are common reasons for governments to implement tariffs?

    Gain a basic understanding of a government-sanctioned import tariff, what it is meant to accomplish and common reasons for ... Read Answer >>
  4. Is it possible for a country to have a comparative advantage in everything?

    Learn whether one country can have a comparative advantage in everything and what the difference between comparative advantage ... Read Answer >>
  5. What is a trade deficit and what effect will it have on the stock market?

    A trade deficit, which is also referred to as net exports, is an economic condition that occurs when a country is importing ... Read Answer >>
  6. How does investment banking differ from commercial banking?

    Discover how investment banking differs from commercial banking, the responsibilities of each and how the two can be combined ... Read Answer >>
Hot Definitions
  1. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  2. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  3. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  4. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  5. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
  6. Run Rate

    1. How the financial performance of a company would look if you were to extrapolate current results out over a certain period ...
Trading Center