Non-Tariff Trade Barriers: Non-Tariff Trade Barriers and New Protectionism

Dr. Manishika Jain- Join online Paper 1 intensive course. Includes tests and expected questions.

Non-Tariff Trade Barriers and New Protectionism

  • Import Quota

  • VER (Voluntarily export Restraints )

  • Technical, administrative (Phytosanitary and sanitary measures)

  • International cartels

  • Dumping

  • Export subsidies

Import Quota

  • Direct quantitative restriction on the traded commodity. Can be imported or exported commodity.

  • Usually used for protection of Nascent industries, crucial domestic industries and to boost economic growth (inclusive growth).

  • WTO has banned quantitative restrictions.

VER (Voluntarily Export Restraints)

  • Under VER, the importing country urges/induces the exporting nation to restrict the exports of a particular commodity, under the threat of high tariffs and other barriers if not compiled.

  • Uruguay round prohibited imposition of VER.

  • Is there a loophole in this?

Technical, Administrative Regulations

  • Sanitary, Phytosanitary measures.

  • Labelling requirements, packaging.

  • Export and Import permits.

Illustration 1 for TechnicalAdministrativeregulations

Illustration 1 for TechnicalAdministrativeregulations

Loading image

International Cartels

  • When the suppliers in the International market form a cartel to restrict the supply. Example: Crude Oil (OPEC).

  • Fails when one or more nation are not part of it, as they fill the supply gap.

Illustration 2 for InternationalCartels

Illustration 2 for InternationalCartels

Loading image

Export Subsidy

Illustration 3 for InternationalCartels

Illustration 3 for InternationalCartels

Loading image

Export Subsidies

  • Benefits to the exporters by the nations in order to stimulate exports.

  • Can be in terms of tax relief, tax rebate, LoC, interest free loans, free storage facilities on harbour, lower unloading and loading charges etc.

  • E.g.: India : Duty free imports for exporters and SEZ*.

  • Bangladesh : Cheap LoC, Duty drawback*, special bonded warehouse.

Dumping

  • It means selling the commodity at a lower price in the International market, than domestically. The costs are much lower than the lowest cost foreign producer.

  • 3 types : Persistent, Predatory and Sporadic dumping.

  • Persistent dumping : Commodity sold at a higher price in the domestic market and at a lower price in the International market.

  • Predatory Dumping : to acquire monopoly by driving out the foreign producer.

  • Sporadic dumping: occasional sale of commodity (unforeseen surplus).