IntroductionThe arguments for government intervention in international trade take two paths: political and economic (Hill 2011, p205). Political intervention concerns the protection of certain groups within the nation. These groups are generally producers who have much to gain at the expense of consumers. On the other hand, the economic arguments in favor of intervention aim to increase the wealth of the nation for the benefit of all, i.e. producers and consumers. This article examines the arguments for protectionist measures and the instruments that governments apply to control trade and foreign direct investment. First, the trade policy instruments available to governments are defined. The arguments for intervention are then examined. Next, the challenges and opportunities faced by international companies wishing to expand into these controlled markets are then analyzed and discussed with examples. Finally, conclusions are drawn from the analysis and recommendations made on multinational strategies to be adopted to exploit the available opportunities. Trade policy instruments Governments have at their disposal various instruments to use in trade policy. The most common ones are briefly explained below; Tariffs – Hill (2011, p199) defines this as a tax levied on imports or exports. The tax can be fixed (specific) or expressed as a percentage of the value of the goods (ad valorem). Import tariffs help governments raise revenue, protect local producers who gain, and affect consumers who lose out due to higher product prices. Import tariffs promote inefficiency in local industries as goods are produced that could be produced more efficiently abroad. Export tariffs are less common. They are used to generate revenue from exports and...... middle of paper ......d Beghin, JC (2012) Protectionism indices for non-tariff measures: an application to maximum residue levels. Food Policy 45 pp.57-68.10. Mayda, AM and Rodrik, D. (2005) Why are some people (and countries) more protectionist than others?. European Economic Review, 49 (6), pp. 1393--1430.11. Ng, F., Yeats, A. and Er. (1997) Open economies work better! Have Africa's protectionist policies caused its marginalization in world trade? World Development, 25 (6), pp. 889--904.12. Tharakan, P., Greenaway, D. and Kerstens, B. (2006) Anti-dumping margins and excessive injury margins in the European Union: a counterfactual analysis. European Journal of Political Economy, 22 (3), pp. 653--674.13. Wang, Y. (2013). Fiscal decentralization, endogenous policies and foreign direct investment: Theory and evidence from China and India. Journal of Development Economics. 103 pages.107-123.