Non Tariff Barriers
NON TARIFF BARRIERS
What are non tariff barriers?
Non- tariff barriers are broadly defined as any impediment to trade other than tariffs. Non tariff barriers can be classified into two groups; Direct and Indirect.
(a)Direct Barriers are barriers that specifically limit import of goods or services.
Eg: Embargoes and quotas
EMBARGOES:
Embargoes are the most restrictive of the direct non tariff barriers. They are either a complete ban on trade with a foreign nation or a ban on sales or transfer of specific products.
Eg: The U.S. has imposed embargoes on Afghanistan, Cuba, Iraq and Iran.
QUOTAS:
Quotas are a quantitative restriction on imports. They are based on either value of goods or on quantity. They can be placed on all goods of a particular kind coming from all countries, a group of countries or only one country.
(b) Indirect Barriers are laws, administrative regulations, industrial/commercial practices and even social and cultural forces that either limit or discourage sale or purchase of foreign goods or services in a domestic market.
To restrict imports, countries may impose monetary or exchange controls on currencies. Foreign governments can impose technical barriers to trade, for example, performance standards for products, product specifications or products safety.
Eg: Japan has governmental restrictions on the use of food preservatives. It is a trade barrier in disguise, because foods without preservatives cannot be transported long distance.
Import Licensing Schemes and Customs Procedures
Some governments require importers to apply for permission to import products, subjecting them to complex and discriminatory requirements. It is often expensive and time-consuming.
Let us look at some tariff measures that are maintained against Indian exports:
1) Country- The United States of America
Product- Marine Products
Non tariff barrier- Increased in-detailed inspections under the Bio-Terrorism Act.
- Customs Bond requirement
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What are non tariff barriers?
Non- tariff barriers are broadly defined as any impediment to trade other than tariffs. Non tariff barriers can be classified into two groups; Direct and Indirect.
(a)Direct Barriers are barriers that specifically limit import of goods or services.
Eg: Embargoes and quotas
EMBARGOES:
Embargoes are the most restrictive of the direct non tariff barriers. They are either a complete ban on trade with a foreign nation or a ban on sales or transfer of specific products.
Eg: The U.S. has imposed embargoes on Afghanistan, Cuba, Iraq and Iran.
QUOTAS:
Quotas are a quantitative restriction on imports. They are based on either value of goods or on quantity. They can be placed on all goods of a particular kind coming from all countries, a group of countries or only one country.
(b) Indirect Barriers are laws, administrative regulations, industrial/commercial practices and even social and cultural forces that either limit or discourage sale or purchase of foreign goods or services in a domestic market.
To restrict imports, countries may impose monetary or exchange controls on currencies. Foreign governments can impose technical barriers to trade, for example, performance standards for products, product specifications or products safety.
Eg: Japan has governmental restrictions on the use of food preservatives. It is a trade barrier in disguise, because foods without preservatives cannot be transported long distance.
Import Licensing Schemes and Customs Procedures
Some governments require importers to apply for permission to import products, subjecting them to complex and discriminatory requirements. It is often expensive and time-consuming.
Let us look at some tariff measures that are maintained against Indian exports:
1) Country- The United States of America
Product- Marine Products
Non tariff barrier- Increased in-detailed inspections under the Bio-Terrorism Act.
- Customs Bond requirement
-
References: International Business Law and its Environment- Richard Schaffer, Filiberto Augusti & Beverly Carle International Business- Francis Cherunilam