Non-tariff barriers

Non-tariff barriers are trade restrictions that are not in the form of tariffs. They can be in the form of quotas, subsidies, embargoes, local content requirements, and other legal or administrative measures. They can be used to protect domestic industries from foreign competition, to restrict the flow of imports, and to regulate the terms of trade.

Non-tariff barriers are an important tool for governments to protect their domestic industries from foreign competition and to regulate the terms of trade. They can be used to limit the flow of imports, to subsidize domestic industries, and to promote the development of local industries.

Example of Non-tariff barriers

A non-tariff barrier is a trade restriction that is not in the form of a tariff. Examples of non-tariff barriers include quotas, subsidies, embargoes, local content requirements, and other legal or administrative measures used by governments to protect domestic industries from foreign competition, restrict the flow of imports, and regulate the terms of trade.

• Quotas: Quotas are limits on the amount of a certain good that can be imported. They are used to protect domestic industries from foreign competition and to limit the flow of imports.
• Subsidies: Subsidies are payments to domestic industries that are intended to make their products more competitive in the global market. They can be used to encourage the development of certain industries or to protect them from foreign competition.
• Embargoes: Embargoes are prohibitions on the import or export of certain goods. They are used to restrict the flow of imports and protect domestic industries.
• Local content requirements: Local content requirements are measures that require a certain percentage of a product to be sourced from domestic suppliers. They are used to protect domestic industries from foreign competition and to encourage the development of local industries.

Non-tariff barriers are an important tool for governments to protect their domestic industries from foreign competition and to regulate the terms of trade. They can be used to limit the flow of imports, to subsidize domestic industries, and to promote the development of local industries.

When to use Non-tariff barriers

Non-tariff barriers can be used to protect domestic industries from foreign competition, to restrict the flow of imports, and to regulate the terms of trade. They can be used when tariffs are not an effective tool for achieving these goals, such as when tariffs are too high or when the goods being imported are not subject to tariffs. They can also be used when the WTO does not allow for the imposition of tariffs, such as in the case of subsidies and local content requirements.

Types of Non-tariff barriers

Non-tariff barriers can be divided into two main categories: quota-based barriers and non-quota-based barriers. Quota-based barriers include quotas, embargoes, and local content requirements, while non-quota-based barriers include subsidies, technical barriers to trade, and other legal or administrative measures.

• Quota-based barriers: Quota-based barriers include quotas, embargoes, and local content requirements. Quotas limit the amount of a certain good that can be imported, while embargoes prohibit the import or export of certain goods. Local content requirements require a certain percentage of a product to be sourced from domestic suppliers.
• Non-quota-based barriers: Non-quota-based barriers include subsidies, technical barriers to trade, and other legal or administrative measures. Subsidies are payments to domestic industries that are intended to make their products more competitive in the global market. Technical barriers to trade are measures that regulate the production and sale of goods, such as product standards and labeling requirements. Other legal or administrative measures can include restrictions on foreign investment, export taxes, and import licensing.

Non-tariff barriers are an important tool used by governments to protect their domestic industries from foreign competition and to regulate the terms of trade. They can be divided into quota-based barriers, such as quotas, embargoes, and local content requirements, and non-quota-based barriers, such as subsidies, technical barriers to trade, and other legal or administrative measures.

Advantages of Non-tariff barriers

Non-tariff barriers have several advantages compared to tariffs. They are easier to implement and can be tailored to specific industries or products. They are also more targeted, so they can be used to protect certain industries without affecting the entire economy.

• Easier to implement: Non-tariff barriers are easier to implement than tariffs, since they are not subject to the same international rules and regulations. This makes them an attractive option for governments that want to quickly implement trade restrictions.
• Targeted: Non-tariff barriers can be tailored to specific industries or products. This allows governments to protect certain industries without affecting the entire economy.
• Lower cost: Non-tariff barriers are usually less expensive than tariffs, since they do not involve levying a tax. This makes them an attractive option for governments that want to limit imports without incurring high costs.

Limitations of Non-tariff barriers

Non-tariff barriers can have negative consequences for global trade and the global economy. They can lead to trade disputes between countries, can lead to higher prices for goods, and can create market distortions.

• Trade disputes: Non-tariff barriers can lead to trade disputes between countries. Countries may challenge each other's use of non-tariff barriers, leading to costly and disruptive disputes.
• Higher prices: Non-tariff barriers can lead to higher prices for goods. This can lead to decreased demand for goods and can have a negative impact on economic growth.
• Market distortions: Non-tariff barriers can lead to market distortions. They can lead to the misallocation of resources and can lead to inefficient production.

Other approaches related to Non-tariff barriers

• Voluntary Export Restraints (VERs): Voluntary export restraints are agreements between two countries that limit the amount of a certain good that can be exported from one country to the other. They are used to protect domestic industries from foreign competition and to limit the flow of imports.
• Anti-dumping measures: Anti-dumping measures are measures that are taken to counter the sale of foreign goods at prices below their domestic price. They are used to protect domestic industries from foreign competition and to regulate the terms of trade.
• Safeguard measures: Safeguard measures are measures that are taken to protect domestic industries from sudden and disruptive surges in imports. They are used to protect domestic industries from foreign competition and to regulate the terms of trade.

Non-tariff barriers are an important tool for governments to protect their domestic industries from foreign competition, to limit the flow of imports, to subsidize domestic industries, and to promote the development of local industries. Other related approaches include voluntary export restraints, anti-dumping measures, and safeguard measures.

Non-tariff barriers — recommended articles

Trade liberalization — Open economy — Government intervention — Price control — Price controls — Fixed exchange rate — Barriers to trade — Dumping — Reflation

References

• Egger, P., Francois, J., Manchin, M., & Nelson, D. (2015). Non-tariff barriers, integration and the transatlantic economy. Economic Policy, 30(83), 539-584.
• Kinzius, L., Sandkamp, A., & Yalcin, E. (2019). Trade protection and the role of non-tariff barriers. Review of World Economics, 155, 603-643.