Final answer:
Countries use protectionist measures like tariffs, quotas, and embargoes to restrict trade, leading to higher domestic prices and limited imports, More open trade is negotiated through international agreements within the WTO, aiming to reduce such barriers and enhance the global economy.
Step-by-step explanation:
To reduce or prevent trade, countries often resort to protectionist policies such as tariffs, quotas, and embargoes. An embargo is the most radical measure, barring any trade of certain goods altogether and forcing a country to rely solely on domestic production. This policy leads to a clear loss for consumers who can only consume what is produced locally. Quotas set a maximum limit on the amount of a product that can be imported, effectively increasing prices for consumers and hindering many suppliers from exporting their goods.
For example, if the U.S. imposes a quota on garments from Bangladesh, with the quantity set below the equilibrium, prices on those garments will rise. Meanwhile, tariffs are taxes on imported goods which protect domestic industries but also lead to higher prices for consumers. The General Agreement on Tariffs and Trade (GATT) formed in 1947 and later the World Trade Organization (WTO) have worked towards reducing these barriers to promote international trade. The current effort in this direction is the Doha Round, where nations discuss the possibilities of decreasing trade barriers to potentially grow the world economy significantly.\