tariff and non tariff barriers n.
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tariff and non tariff barriers
Tariff and Non-tariff Barriers:
  • Tariff duty is a tax imposed on the inflow of foreign goods to domestic market (Geoffrey E. Wood, 1988). Tariff duties imposition is solely taking place for two main reasons; to increase the revenue of the state and to protect the local firms against foreign competition.
  • Non-tariff barriers on the other hand is a non-tax measure to favour the domestic firms against the foreign suppliers. It is a complicated concept because it differs to different states, depends on the internal state policies (Ibid).
types of non tariff barriers
Types of Non-Tariff Barriers:
  • Tariff barriers are legislated under the auspices of the World Trade Organisation, the violation of which can affect both the imposer and the one against whome these duties are imposed, on the other hand the non-tariff measures are varying from state to state but literally we include the following non-tariff barriers usually practiced by the states, both in the North and South.
specific limitations on trade
Specific Limitations on Trade:
  • Quotas: A quota is simply a maximum limitation specified by the local state in either value or physical units on imports of a product for a particular time period. It is enforced through licenses issued to both importers and exporters from specific countries or from all foreign countries.
  • Import Licensing Requirements: Local requirements of receiving licenses vary from investor to investor. Increase in administrative fee, permission from different departments and local government particularly affect the importation of the products from the foreign world.
  • Import Price Limit: Specification of the import price limit is also a non-tariff barrier where a minimum import price limit is settled by the local government for the investors importing products from abroad.
  • Embargoes: An embargo is a complete or partial prohibition of the trade with a particular country, in order to isolate it. An embargo is a legal barrier erected against the foreign country to protect national interest, similar to that of economic sanction.
customs and administrative procedures
Customs and Administrative Procedures:
  • Valuation System: Complicated valuation system affect the trade process between countries. Through valuation procedure importers are discouraged to import products from the foreign world to the domestic economy.
  • Anti-dumping Practices: Imposition of restrictions on the inflow of goods from the foreign world on prices lower than the cost of production is a common practice carried by the countries in order to protect the local producers.
  • Tariff Classification: The classification of the tariff duties, their legislation and implementation procedure rising obstacles for the importers to import products from the foreign world.
  • Documentation Requirements: Excessive paper work for the importation of goods, receiving of no-objection certificates and other permissions from the local and regional governments and proper documentation of the valuation, measurement and accounting and the payment of different fees for these documents .
  • Standard Disparities: Standard disparities are known as the gaps in the quality and standard. Such differences in quality create problems for both the trading partners. The importing state can easily block the inflow of goods from the foreign country through standard requirements.
  • Intergovernmental Acceptances: Acceptance or rejection of the standard of the products coming from the foreign world can either encourage or discourage importers. This setting up of the standard depends on local government standard and the involvement of different organisations regulating this process.
  • Packaging, Labeling and Marketing: Packaging and labeling of the products is one of the main determinents that can either facilitate the process or make it complicated.
government participation in trade
Government Participation in Trade:
  • Government Procurement Policy: The buying and selling of goods and services on the part of the local government and the setting up of the procedure for this sale and purchase is termed as government procurement policy, that can affect the trade process.
  • Export Subsidies: Providing incentives either monetary or other rewards in order to encourage local firms to export more is a discouragement or the blockade of the imports.
  • Countervailing Duties: These are the duties imposed under the auspice of the World Trade Organisation in order to neutralise the effects of the subsidies given by the local states to encourage exports and discourage imports. These duties are imposed against a country involved in subsidising its exports and affecting the local firms in the importing country. These duties are imposed in accordance with GATT article IV of the agreement on subsidies and countervailing duties.
govt participation in trade cont
Govt. Participation in Trade Cont.
  • Domestic Assistance Programmes: Programmes financed by the local state in order to assist local producers to export more is a common practice both in the South and North which has been affecting the trade process.
charges on imports
Charges on Imports:
  • Administrative Fee: Excessive administrative charges discourage imports by requiring local importers to pay these charges whenever they import goods from the foreign world.
  • Import Credit Discrimination: Import credit discrimination is a process through which the local state discriminates the importers which is one of the deliberate problems faced by the states both in the North and South.
  • Border Taxes: Raising more questions against imports of one country and favouring the imports of the other country by restricting one border and opening the other through heavy duties or no duty.
charges on imports cont
Charges on Imports, Cont.
  • Variable Levies: Levy is also imposed on products in order to raise their prices as much as at least equal to the price of the similar goods produced at the domestic level. Such levies are adjusted often in response to world market prices and to protect the administered price at the local level.
  • Special Supplementary Duties: Special supplementary duties are imposed on specific products by the local state in order to achieve the limited import target.
  • Voluntary Export Restraints: Voluntary export restraints, nearly identical to quotas, are agreements between exporting and importing countries limiting the maximum amount of exports in either value or quantity terms to be sold within a given period. Characterizing these restraints as voluntary is somewhat misleading because this is properly agreed and designed to prevent official protective measures by the importing country. In the 1980s exports of autos by the Japanese to the United States and UK was voluntarily restrained.
  • Orderly Marketing Agreements: Too many marketing agreements with the suppliers by the local state affect the trade process and discourage importation of foreign goods.