Quotas and other non tariff trade barriers

As was noted earlier, barriers to trade other than tariffs have become far more important in recent years as governments have looked for way s to restrict imports without raising tariffs that were reduced in GATT negotiations.

Barriers to trade other than tariffs have become far more important.

Modern governments have dreamed up hundreds of ways to restrict foreign trade without using a tariff.

Example:

1. U.S. has molded its sanitary standards so that Argentine beef could not meet them.

2. Colombia has used “mixing requirements”, forcing steel importers to buy so many tons of more expensive domestic steel for each ton imported.

Other NTB are:

- state monopolies on foreign trade

- buy-at-home rules for government purchases

- administrative red tape to harass foreign sellers

- complicated exchange controls and so forth

Many of these barriers relate to legitimate regularly functions, which happen to interfere with trade, while others are transparent manipulations of rules for the primary purpose discriminating against foreign trade.

Governmental procurement rules are probably the most important NTB other than quotas. Such rules usually require that, whenever government money is being spent, domestic products must be purchased even if they are more expensive or less useful than imported alternatives.

Many of these NTB are aimed at keeping out imports. Others restrict or subsidize exports.

In the postwar era, the important of NTB to trade has been on the rise. The late 1940s and early 1950s many countries used them to keep tight control over their international payments while recovering from either World War II or longer-term underdevelopment. Since the 1950s, NTB have been reduced only a little, while multilateral negotiations have succeeded in cutting tariffs significantly.

Since the early 1970s NTB have been getting even more formidable.

As also noted earlier, quotas, which are limits on the physical volume of a product that may be imported per period of time, are the most common NTB, but there are many others. It is important u note the following: The mere fact that a policy reduces imports does not makeit a trade barrier; it must discriminate against imports relative to domestic alternate Higher gasoline taxes would reduce imports of oil, but would equally discourage consumption of domestic oil and would therefore not be a trade barrier.

The restrictive effect of an NTB on imports is sometimes a secondary result of a policy directed at another objective, and may even be unintentional. Packagingandlabeling requirements, for example, are easy for domestic firms to meet, because most sales will be in a market where they apply. They may be quite difficultorexpensive for foreign firms, however, because only a small fraction of sales will be in this packaging or labeling format, and the cost of separate arrangements for these exports becomes prohibitive. For example, when Canada adopted rules requiring that all domestic labels be in both English and French, U.S. firms that sold small volumes of products in Canada faced high costs of compliance and a few may have decided to withdraw from the Canadian market. When the United States adopted automobile safety rules. Ford, General Motors, and Chrysler simply produced all domestic cars to meet the new specifications, but foreign firms faced a problem. For their local sales, no such rules held and the cars were not changed. To sell in the United States, however, the cars would have to be redesigned to meet U.S. rules. For firms such as Volkswagen, which had large sales volumes here, the cost per car of making the changes was acceptable, and they remained in this market. A few firms that had only small U.S. sales, however, decided that the redesign cost per car was expensive and withdrew from the U.S. market for a few years. These firms later returned with cars that met the U.S rules, but for a few years these safety rules acted as an unintentional barrier to imports.

Most NTBs are decidedly intentional, but they are sometimes disguised to look like a policy directed at another goal. Product quality standards are sometimes designed to keep out foreign products while seeming to have another purpose. Countries sometimes have administrative reasons for slowing the passage of goods through customs. If the products are perishable or are directed at a seasonal market, such slowdowns can effectively keep imports out of a local market.

Governmental procurement rules are probably the most important NTB other than quotas. Such rules usually require that, whenever government money is being spent, domestic products must be purchased even if they are more expensive or less useful than imported alternatives. U.S. government employees or those on U.S. government grants, for example, must use U.S. flag carriers when flying to Europe, even if foreign carriers are cheaper or have more convenient schedules. Many governments have similar rules, although they may be eliminated within Europe in 1992, which would mean that a French firm would be able to compete equally with German firms in bidding on German government contracts.

Quotas

Quotas are limits on the physical volume of a produce that may be imported per period of time, are the most common NTB.

The most prevalent NTB is the import quota, a limit on the total quantity of imports allowed into a country each year. One way or another, the government gives out a limited number of licenses to import items legally and prohibits importing without a license. As long as the quantity of licensed imports is less than the quantity that the quantity that people would want to import without the quota, the quota not only cuts the quantity imported but also drives the domestic price of the good up above the world price at which the license holders buy the good abroad. In this respect, it is similar to the import tariff.

Дата добавления: 2015-11-14