Tariff and Non Tariff Barriers

By Ashish Yadav
OVERVIEW

Trade Barriers
Used to encourage and protect existing
domestic industry
Trade barriers are Tariffs that
Increase Trade
Weaken Trade
Restrict Trade
Quotas
Boycotts and Embargoes
Impact of Tariff (Tax) Barriers
Tariff Barriers tend to Increase:
1. Inflationary pressures
2. Special interests privileges
3. Government control and political considerations in
economic matters
4. The number of tariffs they beget via reciprocity
Tariff Barriers tend to Weaken:
1. Balance-of-payments positions
2. Supply-and-demand patterns
3. International relations (they can start trade wars)
Non Tariff - Trade Barriers
Non Tariff barriers - are another way for an
country to control the amount of trade that it
conducts with another country, either for
selfish or altruistic purposes. Any barrier to
trade creates an economic loss, which means
it does not allow the markets to function
properly.
2) Customs and Administrative Entry
Procedures:
Valuation systems
Antidumping practices
Tariff classifications
Documentation requirements
Fees
1) Specific Limitations on Trade
Quotas
Import Licensing requirements
Proportion restrictions of foreign to domestic
goods (local content requirements)
Minimum import price limits
Embargoes
Six Types of Non-Tariff Barriers
(3) Standards:
1. Standard disparities
2. Intergovernmental acceptances of
testing methods and standards
3. Packaging, labeling, and marking
(4) Government Participation in
Trade:
1. Government procurement policies
2. Export subsidies
3. Countervailing duties
4. Domestic assistance programs
Six Types of Non-Tariff Barriers
(cont'd.)
5) Charges on imports:
Prior import deposit subsidies
Administrative fees
Special supplementary duties
Import credit discriminations
Variable levies
Border taxes
6) Others:
Voluntary export restraints
Orderly marketing agreements
Six Types of Non-Tariff Barriers
(cont'd.)
New Zealand's
apples account for
a third of its
agricultural
exports but have
been banned from
Australia since
1921 due to fears
about the spread
of fire blight, a
crop pest.

By Doug Latimer in Sydney
Published: 1:00AM BST 13 Apr 2010
Apples Banned - Non Tariff Barrier
Mangoes Philippines Restrictions
It is a common practice in
many countries to use non-
tariff barriers to control the
entry of imports.

For instance, Philippine
mangoes and bananas
have to meet strict
phytosanitary requirements
from the US and
Australia.
McDonald France Big Beef

McDonalds France in 1998, ran a
print ad campaign featuring
overweight cowboys complaining
about the fact that McDonald's
France refuses to buy American beef
but uses only French, to "guarantee
maximum hygienic conditions" an
unsubtle effort to identify the Global
Arches with European efforts to
block the import of hormone-laced
American beef. (Karon, 2002)

General Agreement on Tariffs and Trade
Paved the way for the first effective worldwide tariff agreement.
Basic Elements of the GATT:
Trade shall be conducted on a non-discriminatory basis.
Protection shall be afforded domestic industries through
customs tariffs, not through such commercial measures as
import quotas.
Consultation shall be the primary method used to solve global
trade problems.
Eliminating barriers to international trade (Uruguay Round):
The General Agreement on Trade in Services (GATS)
Trade-Related Investment Measures (TRIMs)
Trade-Related Aspects of Intellectual Property Rights (TRIPs)

Summary
Although tariffs have significantly reduced
over the last twenty years in global trade.
Bigger concern is the dismantling of non-
tariff barriers that restrict trade from less
developed countries.
The agricultural sector has had its high
share of discriminatory trade practices to
protect inefficient producers.
Tariffs distort trade flows
Thank You