Trade measures include measures to promote exports and to reduce imports.
1. Export Promotion
Exports may be encouraged by
i) reducing or abolishing export duties,
ii) providing export subsidy,
iii) encouraging export production by giving monetary, fiscal, physical and institutional incentives. (Then local people and domestic industries would suffer)
2. Import Control
Imports may be controlled by
i) imposing or enhancing import duties,
ii) restricting imports through import quotas,
iii) licensing and even prohibiting altogether the import of certain non- essential items. But this would encourage smuggling.

1. There are two countries, two commodities and two factors. (2 x 2 x 2 model).
2. Countries differ in factor endowments.
3. Commodities are categorized in terms of factor intensity.
4. Countries use same production technology.
5. Countries have identical demand conditions.
6. There is perfect competition in both product and factor markets in both the countries.

1. There are only two nations and two commodities (2 x 2 model)
2. Labour is the only element of cost of production.
3. All labourers are of equal efficiency
4. Labour is perfectly mobile within the country but perfectly immobile between countries.
5. Production is subject to the law of constant returns
6. Foreign trade is free from all barriers.
7. No change in technology.
8. No transport cost.
9. Perfect competition.
10. Full employment.
11. No government intervention

Factors determining exchange rates are,
(i) Differentials in Inflation
(ii) Differential in Interest rates
(iii) Current Account Deficits
(iv) Public Debt
(v) Terms of Trade
(vi) Political and Economic Stability
(vii) Recession
(viii) Speculation