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Nontariff trade barriers

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This document discusses various types of non-tariff trade barriers including import quotas, tariff-rate quotas, orderly marketing agreements, domestic content requirements, subsidies, and dumping. Quotas restrict the quantity of goods that can be imported, while tariff-rate quotas establish two tiers of tariffs for imports below and above a quota limit. Orderly marketing agreements involve voluntary export restraints between trading partners. Domestic content requirements mandate a certain percentage of a product be domestically produced. Subsidies and dumping can also distort trade flows.

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International Economics By Robert J. Carbaugh 8th Edition Chapter 6: Nontariff Trade Barriers
Import quotas • Quotas are a restriction on the quantity of a good that may be imported in any one period (usually below free-trade levels) • Global quotas restrict the total quantity of an import, regardless of origin • Selective quotas restrict the quantity of a good coming from a particular country Types of non-tariff barriers
Import quota: trade & welfare effects Types of non-tariff barriers
Effects of a quota on sugar imports Types of non-tariff barriers
Comparing tariffs and quotas Types of non-tariff barriers
Tariff-rate quota • The tariff-rate quota is a two-tiered tariff – A specified number of goods (up to the quota limit) may be imported at one (lower) tariff rate, while imports in excess of the quota face a higher tariff rate Types of non-tariff barriers
Tariff-rate quota: trade & welfare effects Types of non-tariff barriers
Orderly marketing agreements • Market sharing pact signed by trading partners • Intended to protect less efficient domestic producers • Usually involve voluntary export restraints, or export quotas Types of non-tariff barriers
Effects of a voluntary export quota Types of non-tariff barriers
Domestic content requirements • Rules that require a certain percentage of a product’s total value to be produced domestically • Often has the effect of forcing lower-priced imports to include higher-cost domestic components or be assembled in a higher- cost domestic market Types of non-tariff barriers
Domestic content: trade & welfare effects Types of non-tariff barriers
Subsidies • Domestic subsidy – Payments made to import-competing producers to raise the price they receive above the market price • Export subsidy – Payments and incentives offered to export producers intended to raise the volume of exports Types of non-tariff barriers
Subsidies: trade & welfare effects Types of non-tariff barriers
Subsidies: trade & welfare effects Types of non-tariff barriers
Dumping • The practice of selling a product at a lower price in export markets than at home (or exporting at prices below production cost) – Sporadic dumping - to clear unwanted inventories or cope with excess capacity – Predatory dumping - to undermine foreign competitors – Persistent dumping - reaping greater profits by engaging in price discrimination Types of non-tariff barriers
Other NTBs • Government procurement policies • Social regulations (health, environmental and safety rules can also restrict trade) • Sea transport and freight restrictions Types of non-tariff barriers
Nontariff trade barriers

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Nontariff trade barriers

  • 1. International Economics By Robert J. Carbaugh 8th Edition Chapter 6: Nontariff Trade Barriers
  • 2. Import quotas • Quotas are a restriction on the quantity of a good that may be imported in any one period (usually below free-trade levels) • Global quotas restrict the total quantity of an import, regardless of origin • Selective quotas restrict the quantity of a good coming from a particular country Types of non-tariff barriers
  • 3. Import quota: trade & welfare effects Types of non-tariff barriers
  • 4. Effects of a quota on sugar imports Types of non-tariff barriers
  • 5. Comparing tariffs and quotas Types of non-tariff barriers
  • 6. Tariff-rate quota • The tariff-rate quota is a two-tiered tariff – A specified number of goods (up to the quota limit) may be imported at one (lower) tariff rate, while imports in excess of the quota face a higher tariff rate Types of non-tariff barriers
  • 7. Tariff-rate quota: trade & welfare effects Types of non-tariff barriers
  • 8. Orderly marketing agreements • Market sharing pact signed by trading partners • Intended to protect less efficient domestic producers • Usually involve voluntary export restraints, or export quotas Types of non-tariff barriers
  • 9. Effects of a voluntary export quota Types of non-tariff barriers
  • 10. Domestic content requirements • Rules that require a certain percentage of a product’s total value to be produced domestically • Often has the effect of forcing lower-priced imports to include higher-cost domestic components or be assembled in a higher- cost domestic market Types of non-tariff barriers
  • 11. Domestic content: trade & welfare effects Types of non-tariff barriers
  • 12. Subsidies • Domestic subsidy – Payments made to import-competing producers to raise the price they receive above the market price • Export subsidy – Payments and incentives offered to export producers intended to raise the volume of exports Types of non-tariff barriers
  • 13. Subsidies: trade & welfare effects Types of non-tariff barriers
  • 14. Subsidies: trade & welfare effects Types of non-tariff barriers
  • 15. Dumping • The practice of selling a product at a lower price in export markets than at home (or exporting at prices below production cost) – Sporadic dumping - to clear unwanted inventories or cope with excess capacity – Predatory dumping - to undermine foreign competitors – Persistent dumping - reaping greater profits by engaging in price discrimination Types of non-tariff barriers
  • 16. Other NTBs • Government procurement policies • Social regulations (health, environmental and safety rules can also restrict trade) • Sea transport and freight restrictions Types of non-tariff barriers