1. ENTRY BARRIERS
WEEK 3

2. Restrictions on Entry of Goods
Outright Prohibition
Tariff Barriers
Non-Tariff Barriers

3. Outright Prohibition Illicit Drugs Endangered Species Certain Foods
Certain Books & Materials
Certain Products
or Products from Certain Countries

4. Tariff Barriers (Tax on consumption of imports) Standard Tariffs
Anti-Dumping Tariffs
Countervailing Tariffs

5. Standard Tariffs Ad valorem Specific Compound
a specified percentage of the value of merchandise.
Specific
a specified amount per unit of weight or other quantity.
Compound
a combination of ad valorem and specific.

6. Tariff Calculation
Suppose the U.S. imposes an ad valorem tariff rate of 25% on import of a product.
This means that if the U.S. importer paid $100 to a foreign manufacturer at the point of shipping in the foreign country (FOB), the importer must pay $25 to the U.S. Government.
Note that the cost of tariffs is passed on by the importer to the consumer.

7. (a) the fair market value in the manufacturer’s home market, or
Anti-dumping tariffs
Imposed when imported merchandise is sold to importers in the United States at a price that is less than-
(a) the fair market value in the manufacturer’s home market, or
(b) cost of production.

8. Countervailing tariffs
Imposed when imported merchandise has received subsidies provided by the government in the exporter’s home country.

9. Non-Tariff Barriers Quotas Import License Exchange Permission
Product Standards
Customs Procedures

10. Quota
A decision by the importing country about how much of a particular product can be imported in the country from different countries in a year.

11. Voluntary Export Restraint
A quota set by the exporting country on how much of a particular product can be exported to a particular country on a year.

12. Why countries restrict imports?
Health and Safety
National Security
Moral Standards
Employment
Infant & Import Damaged Industries
and, Strategic Industries

13. Restrictions on Equity
Outright Prohibition
Ownership Restriction
Technology Requirement
Local Content Requirement
Local Employment Requirement
Export Requirement

14. U.S. does not restrict equity.

15. Why countries restrict equity?
To Prevent:
Hollowing Out
Exploitation of Resources
Outflow of Profits
Decisions Favoring Home Country
Destruction of Strategic Industries
Threats to National Security

16. Who bears the cost of the barriers?
Consumers

17. Who benefits from the barriers?
U.S. producers of products similar to the imported products on which barriers are imposed.

18. Yet, they love capital! You can get: Tax Concessions
Tariff Concessions
Subsidies