International Trade Policy: Tariff and Non-tariff Barriers

Plan Essence of NTBs Types of NTBs

Non-tariff barriers to trade include import quotas, special licenses, unreasonable standards for the quality of goods, bureaucratic delays at customs, export restrictions, limiting the activities of state trading, export subsidies, countervailing duties, technical barriers to trade, sanitary and phyto-sanitary measures, rules of origin, etc.

Definition of Non-Tariff Barriers (NTBs) Non-tariff barriers (NTBs) are trade barriers that restrict imports but are not in the usual form of a tariff.

Nontariff barriers are another way for an economy to control the amount of trade that it conducts with another economy, either for selfish or altruistic purposes. Any barrier to trade will create an economic loss, as it does not allow markets to function properly. The lost revenues resulting from the barrier to trade can be called an economic loss.

Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use. Some non-tariff trade barriers are expressly permitted in very limited circumstances, when they are deemed necessary to protect health, safety, sanitation, or depletable natural resources. In other forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs.

NTBs have proven much less amenable to reduction through international regulations - in fact two of industry groups historically most affected by NTBs, agriculture and textiles, have been excluded from the negotiation process

Their use has risen sharply after the WTO rules led to a very significant reduction in tariff use. Some non-tariff trade barriers are expressly permitted in very limited circumstances, when they are deemed necessary to protect health, safety, sanitation, or depletable natural resources. In other forms, they are criticized as a means to evade free trade rules such as those of the World Trade Organization (WTO), the European Union (EU), or North American Free Trade Agreement (NAFTA) that restrict the use of tariffs.

Import quota The import quota is a direct quantitative restriction on the number of units of a good that can be imported during specified time period

There are two most common policy goals of quotas: To protect a domestic industry from foreign competition To cut imports in order to reduce a balance of trade

Export quota The export quota is a direct quantitative restriction on the number of units of a good that can be exported during specified time period

What is the difference between Tariff Barriers and non Tariff Barriers The purpose of both tariff and non tariff barriers is same that is to impose restriction on import but they differ in approach and manner. Tariff barriers ensure revenue for a government but non tariff barriers do not bring any revenue. Import Licenses and Import quotas are some of the non tariff barriers. Non tariff barriers are country specific and often based upon flimsy grounds that can serve to sour relations between countries whereas tariff barriers are more transparent in nature. Non-tariff barriers can be urgently introduced whereas introducing tariff barriers takes quite a long time

Six Types of Non-Tariff Barriers to Trade Specific Limitations on Trade: Import Licensing requirements Proportion restrictions of foreign to domestic goods (local content requirements) Minimum import price limits Embargoes

2. Customs and Administrative Entry Procedures: Valuation systems Anti-dumping practices Tariff classifications Documentation requirements Fees

3. Standards: Standard disparities Intergovernmental acceptances of testing methods and standards Packaging, labeling, and marking

4. Government Participation in Trade: Government procurement policies Export subsidies Countervailing duties Domestic assistance programs

5. Charges on imports: Prior import deposit subsidies Administrative fees Special supplementary duties Import credit discrimination Variable levies Border taxes

6.Others: Voluntary export restraints Orderly marketing agreements