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. Multiple Column Tariff

    A tariff system where the tariff rate or import tax assessed ...
  4. Free Trade Area

    A group of countries that invoke little or no price control in ...
  5. Smoot-Hawley Tariff Act

    U.S. law enacted in June 1930 which caused an increase in import ...
  6. Commercial Bank

    A financial institution that provides services, such as accepting ...
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

    Explaining Economic Integration

    Economic integration reduces or eliminates trade barriers among nations, and coordinates monetary and fiscal policies.
  5. 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 ...
  6. 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.
  7. Insights

    5 Economic Effects Of Country Liberalization

    Liberalization provides new opportunities for diversification and profit.
  8. Insights

    The Dark Side Of The WTO

    The World Trade Organization has its share of detractors. Find out why this international entity has such harsh critics.
  9. 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.
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. How do tariffs protect domestic industries?

    Understand the four ways tariffs are used by domestic government to protect its domestic industries. Learn how tariffs are ... Read Answer >>
  3. 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 >>
  4. How can tariffs cause inefficiencies in domestic industries?

    Understand what a tariff is and why a government would want to impose a tariff. Learn how tariffs can contribute to domestic ... Read Answer >>
  5. 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 >>
Hot Definitions
  1. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  2. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  3. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  4. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  5. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
  6. Gross Domestic Product - GDP

    The monetary value of all the finished goods and services produced within a country's borders in a specific time period, ...
Trading Center