There are two restrictions on foreign trade (i.e., trade of goods and services between two sovereign nations) which are removed by liberalization of foreign trade.

(a) Entry Tax or Customs Duty: This is a mechanism, where by prices of imported goods are increased, to provide leeway to domestic players. However under liberalization, ideally there will be no customs duty on any imported product.

(b) Lifting of Quotas or Restrictions on the Quantity being imported: This generally provides cushion to domestic manufacturer from cut throat competition. However, under liberalization, there will be no restrictions on the quantity of goods, except in rare condition, which would make the domestic firms face higher level of competition.