Over the past few decades, the Worldtrading system has become increasingly more open. Tariffrates have been reduced and quantitative restrictions(quotas) have been progressively eliminated, e.g. theMulti-Fiber Agreement (MFA). Most countries have adoptedmore outward-looking economic policies, seeking to increasegrowth and employment through expanding exports. Suchoutward looking policies have even been adopted by countrieswhich previously pursued policies based on importsubstitution as in South Asia. Protective trade restrictionsstill persist, but tend to be in terms of more subtlenon-tariff barriers (such as sanitary or phyto-sanitarystandards), though anti-dumping measures and temporaryquantity restrictions are still used by many countries toshield domestic producers. Trade regulations no longersolely attempt to protect domestic producers; their scopehas extended to cover the need for enhanced security and thedesire for greater consumer protection through thetraceability of the production chain for many agriculturalproducts. Intense competition compels firms to reduce coststhroughout their manufacturing and distribution processes.Outsourcing to lower cost firms and countries has been onemajor source of cost reduction, reduced inventory coststhrough just-in-time manufacturing, and distribution systemshas been another. Both are predicated on efficient, reliableand low-cost supply chains. With the worldwide fall intariff levels, the efficiency of supply chains and theassociated logistics costs are becoming core determinants ofthe competitiveness of both firms and countries. They mayalso influence the destination of inward direct investment;many countries can offer low labor costs and tax incentives,fewer can offer quick, efficient, reliable, and low cost logistics.
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