Nontariff Trade Barriers

In the past two decades, nontariff trade barriers have gained in importance as protectionist devices. What are the major nontariff trade barriers?

“The major nontariff trade barriers include quotas, domestic content requirements, subsidies, antidumping regulations, discriminatory procurement practices, social regulations and sea transport and freight restrictions” (158). There are several types of quotas.

Quotas are a physical restriction on the quantity of goods that may be imported during a specific time period (148). The quota number is smaller than the number that would occur under free trade conditions. An import quota usually involves applying for a time consuming import license that has to be issued prior to being allowed to actually import (148).

The World Trade Organization has outlawed import quotas on manufactured goods. Recent trade negotiations proposed that countries convert quotas into tariffs (148-149). There is also a global quota which permits x number of goods to be imported but doesn’t restrict who or where the import comes from and a selective quota which is specific in number and country (149).

Voluntary export quotas usually affect the economy much like an import quota of equal nature. The difference is they are voluntary and limit the number of exports to be sold by the exporting nation. The purpose of this quota is different from others as purpose is to moderate the international competition and allow less effective domestic producers to sell their goods that would otherwise not be sold due to cheaper and better similar products available through import. The revenue effect of an export quota is captured by the foreign exporting company or its government (156).

Domestic content requiremen...

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...rket they need the benefit of the export quota. The export quotas are voluntary in the sense that they are an alternative to more stringent trade restraints that might be imposed by an importing nation.

An export quota reduces the supply of an imported product, which leads to higher prices in the importing nation. The price increase triggers a decrease in consumer surplus (181). Voluntary export quotas tend to have identical economic effects to equivalent import quotas, except for being implemented by the exporting nation. The revenue effect from the export quota is captured by the foreign exporting company or its government (156). So the home country will experience less welfare loss with an import quota.

Works Cited

Carbaugh, Robert J., “International Economics”, 12th ed., Mason, OH: Thomson South-Western, a part of the Thomson Corporation, 2009.