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

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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 2 for Technical_Administrative_regulations

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 3 for International_Cartels

Export Subsidy

Illustration 4 for International_Cartels

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) .

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