Commercial Policy

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. Balanced Trade

    A condition in which an economy runs neither a trade surplus ...
  2. Tariff War

    An economic battle between two countries in which Country A raises ...
  3. Dollar Drain

    When a country imports more goods and services from another country ...
  4. Import

    A good or service brought into one country from another. Along ...
  5. Net Exports

    The value of a country's total exports minus the value of its ...
  6. Export

    A function of international trade whereby goods produced in one ...
Related Articles
  1. Term

    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. Economics

    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. ...
  3. Economics

    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.
  4. Economics

    Macroeconomics: International Trade

    By Stephen Simpson International trade is the exchange of goods, services and capital across national borders. It is a multi-trillion dollar activity, central to the GDP of many countries, and ...
  5. Economics

    Explaining Economic Integration

    Economic integration reduces or eliminates trade barriers among nations, and coordinates monetary and fiscal policies.
  6. Term

    Understanding Net Exports

    Net exports are the difference between a country’s exports and imports.
  7. Forex Education

    Forex Tutorial: Economic Theories, Models, Feeds & Data

    There is a great deal of academic theory revolving around currencies. While often not applicable directly to day-to-day trading, it is helpful to understand the overarching ideas behind the ...
  8. Economics

    Understanding Terms of Trade

    Terms of trade measures a country’s trading efficiency.
  9. Economics

    Understanding Imports

    An import is a good or service that’s brought into one country from another.
  10. Economics

    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.
RELATED FAQS
  1. Which countries have the highest tariffs?

    Find out which countries have the most restrictive import tariffs on international products as ranked from data collected ... Read Answer >>
  2. What are key benefits to a country that has engaged in a policy of currency depreciation?

    Learn about key benefits to a country engaging in a policy of currency depreciation, such as smaller trade deficits, employment ... Read Answer >>
  3. What economic indicators are most used when forecasting an exchange rate?

    Discover what economic indicators are most widely used to forecast a country’s exchange rate and how various factors influence ... Read Answer >>
  4. Which factors can influence a country's balance of trade?

    Find out about the factors that affect a country's overall balance of trade, including factor endowments, barriers to trade, ... Read Answer >>
  5. 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 >>
  6. 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 >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center